RO: Industrial output down 1.5% in 2024

Industrial production dropped -1.2% m/m and -3.4% y/y in December 2024, slightly better comparted to our expectations of -2.0% m/m and -4.9% y/y but below the Bloomberg consensus of -2.1% y/y. Industrial output was 1.5% lower in 2024 vs 2023, marking the second consecutive year of contraction.

We think that industrial production may resume growth this year following contractions in 2023 and 2024. Our forecast for industry growth is +1.1% against the backdrop of slight acceleration in Eurozone economic growth. Domestic and external industrial surveys paint a bleak picture for the Romanian manufacturing and the recovery is likely to be slow.

Mining dropped -1.7% m/m and -1.2% y/y, manufacturing fell by -0.9% m/m and -2.9% y/y, while energy production is down -3.9% m/m and decreased by -5.0% y/y in December 2024. Looking at the full year 2024, mining is down -1.0% y/y, manufacturing is down -1.1% y/y and energy production was -4.7% y/y lower.

BCR Romania Manufacturing PMI ended 2024 at historical low and the first month of 2025 came even lower. Muted demand linked to a combination of political noise, budgetary constraints at clients and lower customer interest were the problems reported in the context of lower new orders numbers. The current global climate remains unfriendly for Romanian manufacturing exports. Looking at the manufacturing activities, data reveals that food, furniture manufacturing and metal products have been offsetting the negative contribution posted by all other sectors in 2024. Auto industry has been particularly weak last year.

Manufacturing confidence came at -2.3 in January vs -2.5 in December on higher production expectations. Quarterly survey of manufacturing shows capacity utilization lower at 67.8% in 1Q25 vs 71.2% in 4Q24 and well below the long-term average of 76.8%. Managers evaluation of order developments over the past three months deteriorated is January 2025 vs October 2024.

Mood among German manufacturing companies improved slightly in January according to the Ifo Business Climate survey. HCOB Eurozone Manufacturing PMI shows that European industrial sector ended 2024 in contraction but the first month of 2025 showed and improvement with the headline index at 8-month high.