Good Signs From Economy In First Half

07.27.2011 ZF English

The first part of the year came with a visible improvement in the activity of the various sectors of the economy and encouraging statistical data after more than two years of crisis.

Fast moving consumer goods markets such as the beer market, one of the important indicators as to the progression of the economy, reveal that the decline slowed down (after cumulated drops of over 10% in the last two years) but consumers are still mindful of their spending. The market, however, went up in value in the first half, ZF data reveal.

A significant increase in value can be seen on the fuel market, where the average price for the first six months of 2011 was 19.4% higher for gas and 24.2% higher for diesel compared with the first six months of 2011.

The pharmaceutical and private service markets, two of the sectors unaffected by the crisis where investors continued to come up with money, seem to be on constant rise. On the other hand, the automotive market, which was expected to rebound this year, continued to drop by another 15%, so that companies on the market are pinning all their hopes on the second quarter.

The economy rebound in the second half should be mainly driven by companies deriving a significant portion of their revenue from exports, as well as by service companies, considering consumer spending remains low, according to the data posted by companies about their first six months sales.

Industry and exports continued to go up. Tentative signals of a rebound of construction and consumer spending emerged in May, two fields which were among the main causes of decline last year. Budget revenues continue to rise at a pace of 10% compared with last year, mainly as a result of an increase in VAT and excise duty collection.

Even the analysts of ING Bank, who have the most pessimistic forecast about this year's economic growth, note the favorable developments in the public sector and in the lending segment in their latest report. Lending continued to increase for the third month in a row in June, a positive trend for the economy in the second quarter and especially for the following quarters.

The figures announced thus far indicate the economy may have stayed in the black in the second quarter, despite the slower growth pace compared with the first quarter, when it rose by 0.7%.

Local and foreign bank analysts, as well as international financial institutions have revised their forecasts about this year's performance of the economy upwards, with most new estimates about the gross domestic product (GDP) growth moving from 1% to somewhere in the neighborhood of 2%.

(English version by Loredana Fratila-Cristescu)