Daily Newsletter - 9 May 2022


Macroeconomic (4)
Financial (4)
Investment (3)
Legislative (3)
European News (1)
Social (2)
The risks of a global recession trifecta are rising by the day
The risks of a global recession trifecta are rising by the day, according to Kenneth Rogoff, former IMF chief economist, currently a professor at Harvard University. A recession in Europe is almost inevitable if the war in Ukraine escalates. With US consumer prices currently increasing at their fastest rate in 40 years, prospects for a soft landing for prices without a major impact on growth look increasingly remote. Moreover, China is finding it increasingly difficult to sustain positive growth in the face of draconian Covid-19 lockdowns, which have already brought Shanghai to a screeching halt and now threaten Beijing. In fact, Mr Rogoff pointed out the Chinese economy may already be in recession, according to The Guardian.
New head of ANAF needs to raise more money to fund economic measures
The main objective of the new head of the National Agency for Fiscal Administration (ANAF), Lucian Heiuș, appointed on Thursday, is "to increase the level of collection in order to ensure the financing of economic and social measures", Prime Minister Niciolae Ciucă, who signed Mr Heiuș’s appointment, transmitted. The increase in collections recorded in the first quarter of this year must continue at a faster pace, PM Ciucă pointed out. The implementation of the "Goods Radar" and "E-Invoice" projects can also bring more money to the state budget and ensure a competitive business environment," Prime Minister Nicolae Ciucă pointed out.
Government has approved EUR 300 million grants for four areas of Romanian economy
Minister of European Projects and Investments Marcel Bolos announced, during the briefing at the end of the Government meeting on Friday that the Government had approved RON 300 million grants for four areas of Romania’s economy, namely the food industry, aquaculture, fish farming and agriculture. According to him, the grants are developed on two measures. Under the first measure, micro-grants, worth EUR 5,000 each, will be granted to micro-enterprises, authorized individuals (PFA), individual enterprises and family enterprises that carry out their activity in the four indicated areas. The total budget allocated for this measure is EUR 50 million and a number of over 10,000 beneficiaries has been estimated.
Unprecedented increase in food prices in March 2022 was followed by a slight decrease
The unprecedented increase in prices of food products in March 2022 was followed by a slight decrease in April, of 0.8%, according to the latest report published by the Food and Agriculture Organization of the United Nations (FAO). The aggregate price index fell from the all-time high of 159.7 points (2014 - 2016 = 100), revised from 159.3 points, to 158.5 points. The annual advance of global food prices decreased to 29.8%, from 33.9%, amid a significant monthly fall in oil prices and a slight decline in grain prices. The average price of vegetable oils recorded a 5.7% monthly drop, after having gone up 24.8% in the previous month, and the annual advance decreased from 58.1% to 46.5%. The average monthly increase in the price of oil at global level has been 3.6% over the past 12 months.
Euroins remains the leader of the RCA market with a 35% market share in 4 months of 2022
Euroins reached a 35% market share on the RCA (mandatory civil liability car insurance) segment after the first four months of 2022, slightly down from 36%, having maintained its place at the top of the market, followed by Groupama, with a 20.5% market share, and by Allianz-Tiriac, with a 17% market share, according to the information transmitted by the representatives of the Financial Supervisory Authority (ASF). Compared to the situation at the end of 2021, Groupama managed to increase its market share on the RCA segment and climb to the second place in the top of the RCA market, while Allianz-Tiriac fell to the third place. The next ranking companies in terms of market share in the RCA area are Omniasig - 9.4%, while Axeriad IARD – a company which entered the market at the end of 2021, Grawe and Asirom had market shares between 6.5% and 7.2%, while Generali reached a market share of 1.15% in the first four months of 2022.
Some banks have started offering up to 5% interest rates on deposits
Banks have started increasing interest rates on RON-denominated household deposits up to 5% or even more, depending on the maturities clients opt for. However, some interest rate offers are promotional ones, available for a limited period of time. In order to get a clearer overview of commercial banks’ offers on the market, ZF carried out a simulation on the online financial services comparator Finzoom. This simulation took into account the highest deposit interest offers offered by banks for three-, six-, twelve- and twenty-for-month maturities, regardless of the criteria that banks impose in order to benefit from the highest deposit interest rates. Most banks thus offer higher interest rates if clients use the online environment to make those deposits, and the transfer of one’s income into an account opened at the bank is also taken into consideration in some cases upon granting a higher interest.
OTP Bank Romania recorded a RON 35 million operating profit in Q1/2022
OTP Bank Romania recorded a RON 35 million operating profit in Q1/2022, above the level reported for Q1/2021, but the after-tax result marked RON 24 million losses, due to extraordinary risk provisions, according to information provided by the bank. Operating profit was several times higher than in the first quarter of last year, but 4% lower than in Q4/2021, as a result of higher administrative costs, mainly impacted by the annual payment of contributions to the Deposit Guarantee Fund and the Resolution Fund. On a comparable basis (removing these contributions) operating profit increased by more than 70% in Q1/2022 compared to Q4/2021.
Banca Transilvania reported to BSE a RON 400 million group-wide profit in Q1/2022
Banca Transilvania Financial Group (TLV) has reported to Bucharest Stock Exchange (BSE) a RON 400 million group-wide profit in Q1/2022, down from RON 656 million in the same period of 2021 (-39%), according to calculations based on data from the report published at BSE. Operating revenues in the first three months of the year stood at RON 1.29 billion, up by 12% against the RON 1.16 billion level recorded last year.
Volkswagen to invest EUR 10 billion in Spain to produce electric vehicles and batteries
German automotive manufacturer Volkswagen and its partners will invest EUR 10 billion to produce electric vehicles and batteries in Spain, CEO Herbert Diess said on Thursday, EUR 3 billion more than a previously announced amount. The company also announced a partnership agreement with Spain’s biggest electricity company, Iberdrola, which will set up a solar park to partially power the batteries plant to be built in Sagunto, near Valencia. Iberdrola will invest EUR 500 million in the electrification plan, its CEO Ignacio Sanchez Galan told reporters, without giving further details.
OMV wants to invest heavily in oil and gas production
Austrian energy group OMV will not withdraw from oil and gas production on a short term amid the possible EU embargo on Russian oil and natural gas, OMV CEO Alfred Stern stated during an interview for the daily Kurier. He pointed out that OMV would continue to invest heavily in oil and gas until 2030 and would develop five new gas production facilities, for example in Norway and in the Black Sea, the Neptun project.
An over EUR 1 million investment is soon to start in the town of Targu Bujor in Galati County
An over EUR 1 million investment is soon to start in the town of Targu Bujor in Galati County. The announcement was made by Galati County Council president Costel Fotea after having signed the works contract for a new building at Târgu Bujor Town Hospital. The new building will be dedicated to the Pediatrics department. The tender for the construction of the new building was won by S.C. PM Construct 2007 SRL. This investment is being carried out through the 2014-2020 Operational Program Romania - Republic of Moldova, within a partnership with Hânceşti district.
Fines for not having a valid road vignette could grow considerably
Fines imposed on drivers who drive without having a valid road vignette will grow considerably - according to a draft law initiated by the Government and adopted by the Senate, as the first notified chamber. In the case of passenger cars, fines might increase to a maximum of RON 550, those for passenger vehicles with up to 23 seats will grow to RON 6,200, and fines for passenger vehicles with more than 23 seats could reach RON 11,000.
USR to submit a new draft law to abolish special pensions
Save Romania Union (USR) has announced that it has submitted a new draft law to abolish special pensions for MPs, amid the Constitutional Court’s decision on Thursday indicating that the current law had been passed in breach of the law. In response, the National Liberal Party (PNL) has argued that there is no need for a new law, but a re-analysis of the law criticized by the Constitutional Court of Romania (CCR). USR claims the decision adopted on Thursday by CCR judges and its reasoning have not yet been published in the Official Gazette of Romania, which means that, at the moment, Law 7/2021 abolishing parliamentarians’ special pensions is still in force.
Draft Ordinance on social vouchers is undergoing the proper endorsement process
The draft Ordinance on social vouchers is undergoing the proper endorsement process, and the total value of this program is RON 3.1 billion, Minister of European Projects and Investments Marcel Bolos announced on Friday, saying that the list of final beneficiaries included about 2,861,000 people. He added that the cards distribution to final beneficiaries would also start, but would require a certain period of time to be completed.
European News 
Romanian air operator Tarom receives EUR 1.9 million state aid
Romanian flag carrier Tarom has received €1.9 million in financial support to cover losses made due to the COVID-19 pandemic during the second half of 2020 after it was recently approved by the European Commission. The aid comes from the budget of the transport ministry, the airline’s majority shareholder. The aid covers losses during the second half of 2020 when the COVID-19 pandemic disrupted transport services. Transport Minister Sorin Grindeanu announced that he had signed the executive order to grant the aid following approval from Brussels. He added that the European Commission was currently analyzing a restructuring aid worth €85 million for Tarom. In 2020, Tarom received financial aid to cover the losses registered during the lockdown period from March to June 2020.
Family Minister Gabriela Firea supports equal opportunities between women and men
Family Minister Gabriela Firea has stated that she supports equal opportunities between women and men and has emphasized the importance of "getting women more involved in the decision-making process, but also of combating violence and harassment at the workplace, which are intolerable". She has indicated that the National Agency for Equal Opportunities for Women and Men, now part of the ministry she leads, the Ministry of Family, Youth and Equal Opportunities, has been fighting to combat gender discrimination and has been helping to raise public awareness of gender equality through the implemented policies and programs.
A total of 227,500 inactive people wanted to work in 2021
A total of 227,500 inactive people wanted to work in 2021, but were either not looking for work or were not available to start work, according to data from the National Institute of Statistics (INS). The unemployment rate is the most visible indicator resulting from the Household Labor Survey, used to characterize a multitude of economic and social aspect. Moreover, in order to provide a complete picture of the situation and evolution of the labor market, the INS publishes, on an annual basis, a set of 3 indicators, representing categories of employed or inactive population with some similarities to the unemployed population and different degrees of attachment to the labor market (compared to the standard situation of the category they belong to), namely: underemployed persons; inactive persons looking for a job, but not available to start work; inactive persons not looking for a job but available to start work.