Daily Newsletter - 5 June 2020


Macroeconomic News (5)

Wages up 10% in Q1

In the first quarter of the year, local wages increased by 2.33% compared to the previous quarter, and 10.2% compared to the corresponding quarter of 2019. The wages trend was influenced by the suspension of business because of COVID-19, the reduction of time spent working, and the compensation paid by the state during the state of emergency.


Evaluation commissions centralized drought reports

The Minister of Agriculture and Rural Development, Adrian Oros, announced on Thursday the scope of the damage caused by the drought. The evaluation commissions centralized reports indicating a total area of 1.3 million hectares, out of the 2.9 million hectares sown last autumn.


Mugur Isarescu: "Our economic situation will depend on the EU's economic recovery package"

The future economic situation of Romania will depend mainly on public health events. The EU recovery package designed to address the effects of the COVID-19 crisis will certainly have an important contribution in supporting our recovery efforts, according to the Governor of the National Bank of Romania, Mugur Isarescu.


Cereals production to fall 2.6% this year

The drought will reduce Romania's cereals production by 2.6% in the 2020-2021 market year, despite a 2.2% increase in acreage. Exports will fall by 5.5%, according to a forecast released by the US Department of Agriculture. Wheat production will fall 3.5% to 8.3 million tons, although the estimate may still be revised in order to account for the weather.


Retail sector in second worst drop in EU

Romania had the second largest monthly decline in retail sales in the European Union in April, according to data published by the European Bureau of Statistics, Eurostat. Local retail sales plunged 22.3% compared to the previous month. The largest contraction of all EU member states was reported by Malta: 25.1%.


Financial News (4)

Banca Transilvania slashes mortgage interest rate

Banca Transilvania has slashed the interest rate for RON-denominated housing loans and mortgages, including loans used to refinance other banks' loans. The bank offers an adjustable interest rate made of the IRCC rate (currently at 2.44%) and a margin of 2.55%.


Aggressive rate cut could invite attack on currency

A more aggressive reduction of interest rates would almost immediately invite an attack on the exchange rate, which could no longer be contained, said Eugen Rădulescu, head of the Financial Stability Directorate at the National Bank of Romania (BNR). A depreciation of the national currency by 10-15%, not at all impossible if the domestic interest rates were significantly lower than now, would bring the exchange rate to RON 5.5 - 5.6 / EUR, which would destroy a stability obtained with great effort.


MFP borrowed RON 2.19 billion

The Minister of Finance (MFP) borrowed RON 2.19 billion from the banks on Thursday, through two issues of state bonds, according to data released by the National Bank of Romania (BNR). The bonds mature in 41 months and 86 months.


UniCredit Bank offers special interest rate

UniCredit Bank is offering retail clients a 3.5% interest rate for one year on any new deposit of at least RON 10,000. The deposits must be opened through online banking or the mobile application between June 2 and September 2.


Investment News (2)

British American Tobacco completes EUR 175 million investment at Ploiesti plant

British American Tobacco has completed a EUR 175 million investment projects at the Ploiesti plant. "The EUR 175 million invested in the factory in Ploiesti in the last two years is proof our determination to continue our strategic partnership with Romania. The project is also proof of our commitment to low-risk products, because a major component of this investment was the transformation of Romania into an EU production center for consumables for products that heat tobacco," said BAT's Ram Addanki.


ROCA platform announces new transaction

Roca Investments, a provider of consolidation solutions for Romanian SMEs going through difficult situations, announced a new agri-food transactions, as well as a decision to invest EUR 600,000 in a stake in Piscicola, a fish farm set up in the early '70s and recently modernized.


Politics (1)

PM Orban blasts Parliament

Prime Minister Ludovic Orban said at the beginning of Thursday's Cabinet meeting that "we have to stay strong in the saddle" because Parliament passes every week new laws that generate expenditures for which there are no resources. The PM instructed the ministers who attend the Parliament meetings when such bills are debated to come up with arguments to convince MPs that they have to base their votes on solid arguments and not simply on the fact that 2020 is an election year.


Social (1)

Unemployment rate resumes growing

The unemployment rate rose to 4.8% in April, compared to 4.6% in March, the highest figure since September, 2017, amid a deteriorating labor market situation. According to INS data, the number of unemployed (aged 15-74) rose to 432,000, up from the previous month (414,000 people) and the corresponding month of last year (355,000 people).