Daily Newsletter - 22 November 2021


Macroeconomic (3)
Financial (3)
Investment (3)
Legislative (1)
European News (1)
Social (2)
Romanian economy grew by 8% in Q3/2021
Romania’s economy grew by 8% in Q3/2021, compared to the same quarter of last year, and had the best evolution in the European Union on adjusted data, according to Eurostat, the European Union’s statistical office. The second place in the top of economic growth rates in the European Union is filled by Hungary, which recorded 6.1% GDP growth in the third quarter of 2021. In an analysis of gross series data (on which the Romanian economy grew by 7.2 % year-on-year in Q3 of 2021), Andrei Rădulescu, Banca Transilvania’s chief economist, explains Romania’s positive result through the Romanian economy’s resistance to inflation and to the intensifying health crisis.
The rise in inflation is much above the National Bank of Romania’s forecasts
On Friday afternoon, the National Bank of Romania (NBR) published the minutes of the monetary policy meeting of the Central Bank’s Board of Directors on 9 November 2021, when it had increased the monetary policy interest rate from 1.5% to 1.75% per year, and the Lombard rate, which banks borrow money at, from 2% to 2.5% per year. The increase in inflation is much above NBR’s expectations, and bringing it within NBR’s target range, of 3%, will take almost two years. Inflation grew to 7.9% in October, the highest level of the past decade, and NBR even expects it to exceed 8%. The central bank raised interest rates on the market, but not to the level expected by analysts, in order not to affect economic growth.
UDMR has proposed establishing a solidarity tax
The president of the Democratic Alliance of Hungarians in Romania (UDMR) Kelemen Hunor has stated that revenues must grow and resources are needed. Under these circumstances, UDMR has proposed establishing a solidarity tax to be paid by companies whose turnover exceeds EUR 100 million per year. According to him, the increase in pension will be ensured from the state budget, from taxes and charges, and the budget deficit will be covered from loans as well.
VIG reported EUR 411.6 million gross underwritten premiums for the first 9 months/2021 in Romania
The Austrian group Vienna Insurance Group (VIG), present on the local insurance market through Omanisig, Asirom and BCR Asigurări de Viaţă, has reported a volume of gross underwritten premiums of EUR 411.6 million for the first nine months of 2021 in Romania, up by 16% year-on-year, while its gross profit decreased by 86%, to EUR 1.9 million, according to data from the institution’s financial report. On the other hand, the combined net rate of the three companies in Romania reached 102.4%, while on other markets where VIG operates the rate remained below 100%.
OTP Bank’s goal, to reach a 5% market share in Romania, can be achieved through Apollo program
OTP Bank’s ultimate goal, to reach a 5% market share on the Romanian banking market, can be achieved through the Apollo program, given that the bank has already reached a 4% share of total bank loans, Gyula Fater, the CEO of OTP Bank Romania, stated during a conference. At the end of 2020, OTP Bank Romania, a subsidiary of the Hungarian group OTP Group, ranked 9th asset-wise in the classification of Romanian banking players, with a 2.65% market share.
Part of NBR’s Board was in favor of a 0.5% increase in key rate
During the monetary policy meeting, the members of the National Bank of Romania’s Board of Directors discussed a 0.50% increase in the key interest rate, the main reason cited being the magnitude of the upward revision of the anticipated inflation pattern, according to the minutes of the monetary policy meeting on 9 November 2011. According to the cited source, the Board members agreed that the current circumstances called for another increase in the monetary policy rate, amid the gradual normalization of the monetary policy conduct, so as to bring back and maintain the annual inflation rate in line with the 2.5% ±1% flat target, inter alia via the anchoring of inflation expectations over the medium term, in a manner further contributing to sustainable economic growth.
Ford of Europe plans to bring a service center to Bucharest
Ford of Europe plans to bring a service center to Bucharest and will initially lease 6,000 square meters of offices. This area can subsequently grow, as the center develops, according to data from the real estate market. One Cotroceni Park, the newest office project in the center-west area, built by One United in the Răzoare area, AFI Park near the AFI Cotroceni mall and U Center from Tineretului area are among the project considered by Ford Europe. Ford Romania did not comment on this topic. The opening of a service center would represent Ford’s newest investment in Romania, after the ones from the plant in Craiova. According to the aforementioned sources, the future office’s activity should start in the second quarter of 2022.
Nordis Group has started works on the second stage of the Nordis Mamaia project
Nordis Group, a developer of premium hotel and residential complexes, has started works on the second stage of the Nordis Mamaia project, which will become the most ambitious five-star hotel and residential complex at the seaside. Nordis Mamaia involves over EUR 200 million investments. The complex will have over 3,000 hotel rooms and apartments and more than 18,000 square meters of commercial spaces. The second stage targets the development of 1,160 apartments, 12 restaurants and cafes, as well as the development of an about 26,000 square meter area on the beach for guests.
Agroland Business System has opened the 15th Agroland MEGA store in Romania
Agroland Business System has opened the 15th Agroland MEGA store in Romania, in Balş locality, Olt County. This is the 11th MEGA store inaugurated by the company this year, according to a report of the agricultural products trader published on Bucharest Stock Exchange’s website. The investment in Agroland MEGA Balş amounted to EUR 150,000, which does not include merchandise stocks. The store is located in the center of the city, inside Joy Retail Park, the only commercial park in Balş and has an area of 423 square meters, of which 351 square meters are intended for the actual store.
President Klaus Iohannis promulgated a new law approving a Government Emergency Ordinance
On Friday, 19 November, President Klaus Iohannis promulgated the law approving the Government Emergency Ordinance 118/2020 on the program aimed at supporting Small and Medium-Sized Enterprises "EQUIPMENT AND MACHINERY LEASING FOR SMEs". The program targets the provision of state guarantee facilities in the form of annual guarantee ceilings for financial leasing, made available to non-banking financial institutions registered in the National Bank of Romania’s Special Registry, for the acquisition of new or used movable assets necessary for small and medium-sized enterprises to carry out their activities, as well as for affiliated enterprises that have minimum 250 employees, as users, called beneficiaries.
European News 
PSD wants to renegotiate certain chapters of PNRR
Romania’s Social Democratic Party (PSD) wants to reopen discussions on some chapters of the country’s recovery plan adopted last month. However, a European Commission spokesperson confirmed that exceptional circumstances were needed for member states to request that parts of their recovery and resilience programs be changed once approved. PSD is currently negotiating with PNL and UDMR to form a government coalition. PNL and UDMR were also, together with centrist USR, in the previous coalition, which adopted the country’s recovery and resilience plan. The Commission approved the plan just before the government fell following a no-confidence vote in Parliament.
Classes with physical attendance are allowed in localities where incidence is below 3 per 1,000
The National Committee for Emergency Situations has approved the holding of classes with physical attendance in schools in all localities where the COVID-19 incidence rate for the past 14 days is below 3 per one thousand, regardless of the school personnel’s vaccination rate. More than 1,800 localities in Romania are below this threshold, according to the list published by the Ministry of Education on Friday.
PNL and PSD agreed on a 10% increase in pensions and on a RON 2,550 minimum wage
The National Liberal Party (PNL) and the Social Democratic Party (PSD) agreed, in the last round of negotiations, upon several increases in pensions and children’s allowances starting from 1 January 2022, but also upon an increment in the minimum wage in economy. The increase with the biggest budgetary impact is the one targeting pensions, which will grow by 10% as of 1 January. Moreover, the minimum pension will get from RON 800 to RON 1,000 as of the same date. The estimated budgetary impact is of at least RON 10 billion. Furthermore, pensioners whose pensions are under RON 1,600 will receive RON 1,200 aid in January to cover the increases in utility prices. This bonus will be paid only once a year.