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The Business Week in Romania 02.10 - 06.10.2017

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MACRO

·      Romania has the highest rate of economic growth in the European Union

In the first quarter of the year, Romania recorded the highest rate of economic growth in the EU (5.6%); the economic growth is due to wage increases and tax cuts. Despite its growth, Romania remains one of the poorest EU Member States.

Experts remain skeptical about the sustainability of this economic growth. "The strong economic growth is due to the significant advance of consumption, fueled by wage increases and tax cuts, but this will only work in the short term," said Ionuț Dumitru, Chairman of theFiscal Council. According to him, this type of growth will lead to an increase in trade deficit and current account deficit.

Romania's trade deficit was 3.36bn Euro in the first quarter of 2017, and the current account balance registered a deficit of 690m Euro – twice as much as last year’s first quarter deficit.

·      European Investment Bank: Romania needs to focus on investment

Patricia Wruuck, an economist of the European Investment Bank (EIB), said that, although Romania's economic growth is impressive, attention should be drawn to its weaknesses: economic instability and the low level of investment. According to a study done by EIB, only 68% of Romanian companies are investing, and the private sector’s reluctance is due to the uncertainty caused by internal policies and the lacking infrastructure.

·      Only 5.6% of Romanian companies are financially stable

According to a report by Creditinfo Romania, only 5.6% of Romanian companies pay their debts in time and generate profit. These powerful companies differentiate themselves by paying their debts in 99 days - almost 4 times faster than the national average of 355 days. About 75% of these are micro-enterprises, and most of them are located in Bucharest.

·      The ROBOR index stabilizes at 1.78%

After having seen a significant increase in the past two weeks, the ROBOR index has fallen and remains, for the time being, at 1.78%. The decrease was determined by the National Bank of Romania granting a loan of 9.3bn Lei to commercial banks, through a repo operation due in 7 days.

·      Over 600,000 individuals with overdue payments in August

According to the National Bank of Romania, the number of individuals with overdue payments to banks or non-bank financial institutions, exceeding 30 days, has increased in August by more than 7,000 individuals. The total amount of overdue loans is 7.54bn Lei.

·      Ministry of Public Finance to borrow 2.44bn Lei from banks

The Ministry of Public Finance planned for loans worth 2.44bn Lei from commercial banks, in October. The loans will be used to refinance public debt and finance the state budget deficit. Of the total amount, 2.2bn Lei will be contracted through auctions of treasury certificates and government bonds, and 240m Lei will be contracted through additional uncompetitive offers sessions.

 

Sources: Agerpres, Profit.ro, Ziarul Financiar, Capital

 

BUSINESS

·      Romaero: 9.14m Lei losses in the first semester of 2017

Romaero, the state-owned company that specializes in the maintenance and repair of passenger and cargo aircrafts, recorded losses of 9.14m Lei in the first semester, and a 9% decrease in turnover (compared to the same period of last year). In 2016, the company's losses were almost three times higher (22.29m Lei).

·      TAROM, profit of 1.1m dollars due to newly purchased aircraft

The latest acquisitions made by TAROM this year – two new Boeing 737 aircrafts –generated a profit of 1.1m dollars, according to Răzvan Cuc, the minister of Transport. „The aircrafts became operational in June and have already generated a profit of about 1.1m dollars. Having low fuel consumption and low maintenance costs, the two new aircrafts will, over time, cover the losses caused by previous commercial decisions, such as dismantling the two Airbus A310s without replacing them immediately. This year's commercial decisions generated a gradual increase in the number of passengers transported per month up to a plus of 4% in August 2017 compared to August 2016. This result is not sufficient, but it is a step towards normality”, according to the minister.

·      Blue Air challenges Wizz Air's as market leader

The Blue Air company recorded a 46% increase in air traffic in the first three trimesters of this year. ”In the first nine months of this year, we transported 3.88m passengers, compared to 2.6m passengers in the same period last year", company's officials stated. To achieve these results, the company has introduced over 30 new routes and increased flight frequency over existing routes.

·      The Green Village complex registers a turnover of 2m Euro

In the first nine months of this year, the Green Village four-star complex in Sfântu Gheorghe (Danube Delta), had a turnover of 2m Euro, representing an increase of 18% over the same period last year. The complex had a 71% occupancy, with a total of 9,800 local and foreign tourists. Green Village is currently owned by Eurolines Group România, which predicts a turnover of 2.2m Euro for the current year. "The only way to make sustainable tourism in the Danube Delta is to have a long season – at least nine months. Green Village gives this signal not only to tourists, but also to the local community, because it wants to secure permanent jobs, not just seasonal ones, for those living in the area, and to get involved in the sustainable development of tourism", said Dragoș Anastasiu, presidnt of Eurolines Group România.

·      Heidi begins production in Germany

The Heidi brand of chocolate, which owns a factory in Pantelimon, will begin production in Germany, where it has taken over pralines producer Schwermer Dietrich Stiehl. "We will have the first Heidi made-in-Germany products in the coming weeks, and they will be present even on the Romanian market. There,  we have experts in making chocolate pralines. We are, thus, becoming more and more of an international company", said Peter Müller, managing director of Heidi Romania. The company has a turnover of more than 22m Euro and has focused on international expansion in the past years.

·      Wipro: 15m Euro in the first semester of 2017

The Indian company Wipro, which specializes in consulting and IT outsourcing services, recorded a 15m Euro turnover in the first six months of this year – more than 50% of their total revenue in 2016 (28m Euro).

 

Sources: Profit.ro, Economica.net, Ziarul Financiar, Agerpres

 

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