Europe Construction Market Report 1Q 2024
Romania
Local economic indicators
Gross domestic product (GDP)
The latest flash report by the Romanian National Institute of Statistics (Insse) indicates that GDP rose by 1% (seasonally adjusted; constant prices) in a year-over-year (YoY) comparison but experienced a 0.4% decline in 4Q 2023 when compared to the previous period, 3Q 2023. Additionally, GDP increased by 2% in 2023 when compared to 2022.
Eurostat’s latest data validates both the 1% YoY GDP increase and the 0.4% decline between 3Q and 4Q. Furthermore, gross value added (GVA) saw noticeable increases, climbing by 7.1% YoY and 2.2% over the previous period. These robust figures are corroborated by the notable growth of the construction industry's contribution to the overall GDP, which surged by 10.35% YoY, marking an increase from 6.1% in Q3 2022 to 6.8% in Q3 2023.
The Organisation for Economic Co-operation and Development (OECD) revised its GDP forecast for Romania downwards for 2023 and 2024 from 2.6% to 1.9% and 3.2% to 3%, respectively.
Inflation
The latest data from the National Institute of Statistics reveals that local inflation in January 2024 increased by 7.4% YoY and by 1.1% compared to December 2023. The Eurostat Harmonised Index of Consumer Prices (HICP) corroborates this trend, indicating a steady decline from 13.4% in January and February to a low of 6.9% in November. The most recent figure for December stands at 7%.
Construction materials
With data available until December 2023, the local industrial producer price index reveals significant decreases in the prices of tubes and bricks, while other sectors exhibited relative stability.
YoY comparisons indicate deflation across most sectors, except for electrical distribution materials, which experienced notable inflation, and sawmilling, which remained stagnant.
Notably, when comparing December 2019 figures, steam and air-conditioning supply stand out for remaining persistently high, hovering at over 90% of pre-pandemic levels.
The table below, with data from the Insse shows the change in cost indices month-over-month (MoM), YoY and lastly, with respect to the start of the global pandemic:
Market outlook
The construction confidence indicator continued its downward trend, initiated in May 2023, experiencing a decrease of 0.3 points from -12.5 to -12.8. This shift was driven by a deterioration in order books, declining from -14.7 to -17.1, although partially offset by a slight improvement in employment expectations from -10.3 to -8.6.
Throughout 2023, the most notable limiting factors in building construction in Romania were labour shortages and insufficient demand, with average annual figures of 16.4 and 11.6, respectively. In the latest reported data for January, labour shortages exhibited an improvement from this average, recorded at 13. However, insufficient demand showed a smaller movement in the opposite direction, increasing to 11.8.
According to experts in our local office, the Romanian construction market experienced typical increases of between 5% and 10% in local market tender prices in 2023, with a reduction of 8% predicted in 2024.
Gleeds recommends revising previously set project budgets to present-day figures based on local statistical information, our own internal data and 1Q 2024 forecasts. Additionally, we advise investors to consider inflation contingencies in their budgets as materials and labour shortages remain unpredictable.
River House I & II, Bucharest, Romania — Gleeds provided Project Co-ordination, Project Management and Quantity Surveying/Cost Management services.
