Industry led Romania into recession

Industrial production fell 18 percent in January, both in monthly and annual terms. Compared to the all-time peak registered in October 2008, the decline nears 40 percent. And forecasts continue to be grim, considering orders registered in January plunged 35 percent year-on-year.

In last year’s final quarter, the 7.7 percent drop in industry’s share in gross domestic product (GDP) was compensated by massive advances of agriculture and construction, which allowed GDP to rise 2.9 percent.

According to data adjusted by season, which will be published in April by the European Commission’s Eurostat statistical office, the Romanian economy could have slipped into a downward trend as of the final quarter of 2008, ING and Raiffeisen analysts said. For the first quarter of 2009, a drop in GDP is becoming a certainty.

“Technically speaking, we will probably go into recession, as recession is defined as a drop in GDP for two quarters in a row, compared to the previous quarter. In the fourth quarter we have a three percent drop, if adjusted by season, and we estimate a slight decline in the first three months of 2009, compared to the first quarter of 2008,” said Raiffeisen’s Chief Economist, Ionut Dumitru. He added that recession will not last until the end of 2009.