A look at some of the main economic events in Romania in 2014
In the first three quarters of the year, Romanian economy reported a constant growth, also the largest at EU level. Current indicators also suggest this trend will continue in the fourth quarter as well. Public investment however continued to drop throughout the year. According to the National Institute of Statistics, Romania reported a budget surplus in the first 10 months. Also worth mentioning is the fact that the National Bank of Romania in November lowered the inflation rate from 2.2 to 1.5% for the end of the year, which is 0.7% less than the level estimated in August.
The Board of the National Bank of Romania on January 8, 2014 decided to lower the monetary policy interest rate, from 4% to 3.75% per year, a new historic low. The Bank also lowered the mandatory minimum reserves for liabilities in lei, from 15% to 12%, as well as hard currency reserves from 20% to 18%. Throughout the year the Bank operated further slashes to the monetary policy interest rate, down to 2.75%. The rate of mandatory minimum reserves in domestic currency (leu) now stands at 10%, and the rate of hard currency reserves at 14%.
On January 8, 2014 the authorities announced Romania gained 2 billion dollars on international markets by issuing 10-year and 30-year maturity bonds, at performance levels below the original estimates. 10-year maturity bonds were sold at 2.15% above the US Treasury bond reference rate, Reuters reports. Therefore the performance of these bonds reportedly stands at 5%. 30-year bonds were sold on the market at approximately 2.45% above the US Treasury bond reference rate, with a performance rate of 6.23%. BNP Parisbas, Citigroup and JP Morgan helped Romania complete the issuance successfully.
On January 20, 2014 the US carmaker Ford brought out its 100,000th B-Max model at the Craiova plant. “In 2013, B-Max had good results all over Europe, selling over 67,000 units”, the US carmaker said at the time. The car plant in Craiova right now has a daily car output of 370 B-Max units. Production was launched in mid 2012.
On February 5, Agrana Zucker of Austria took over the sugar factories in Urziceni, southern Romania, and Liesti, southeastern Romania, from Lemarco SA, one of Romania’s largest manufacturers. “It is Agrana’s intention not only to raise sugarcane production, but to expand sugar manufacturing activities and thus consolidate our impact on south-eastern European markets”, Johann Marihart, the CEO of Agrana said. Agrana Zucker also holds two sugar refineries in Buzau, southern Romania and Roman, eastern Romania.
On February 6, 2014 the US company TRW Automotive announced it would open a new airbag production unit in Roman, thus expanding its operations in Romania. The American company has been doing business in Romania since 2004, when it opened a leather wheel production unit in Timisoara. TRW subsequently expanded its operations to the car parts sector, including the manufacturing of airbags.
On February 26, the German company Bosch invested 77 million euros in a Research and Production Center in Cluj, western Romania. The center became operational at the end of 2013. Located in Tetarom III Industrial Park in Jucu village, the center is part of the Automotive Electronics division, currently developing and producing electronic control units, semiconductors and sensors for the car industry and other fields. In Romania, Bosch has operations in Bucharest, Blaj, Cluj and Timisoara, totaling 2,000 employees since the beginning of the year.
On March 7, Fitch rating agency maintained Romania’s BBB minus rating for long-term hard currency loans, with a stable perspective. The decision reflected a low budget deficit and an economic growth beyond the 2013 estimates. Fitch recalled that Romania’s rating had been positively affected by the rapid rate of economic growth and an increase in the level of confidence regarding the difference of income between Romania and other EU Member States. This positive trend could be supported by structural reforms of state-owned companies, for instance, of the healthcare sector and of public administration.
And that concludes the first part of our economic review of 2014. Next week we will look at investments in Romania by the British home improvement retailer Kingfisher and by Ford, Daimler and Draexlmaier companies. Also next week we will be talking about the Moody’s decision to improve Romania’s rating.
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