RO: Sentiment improved across the board except for consumers

Romania's Economic Sentiment Indicator (ESI) rose to 103 in March 2025, up from 101.7 in February, continuing to recover from the below-average level registered in January. The ongoing rebound suggests growing optimism as political uncertainties subside. Confidence improved across all sectors except consumer confidence. Nevertheless, first quarter ESI decreased to 101.6 compared to the last quarter of 2024 when it averaged 104.4.

We estimate economic growth at +2.0% in 2025 with the risks balance tilted to the downside as the fiscal impulse is likely to turn negative to reach the budget deficit target. Investments supported by EU funds are likely to grow faster than households consumption, while trade deficit could narrow marginally.

Manufacturing confidence rose to -0.1 in March from -1.1 in February, supported by the significantly higher production expectations and higher order books. However, inventory levels saw a slight increase.

Services sentiment increased to 7.4 in March from 5.0 in February, as managers reported better past business, past demand, and higher expected demand.

Consumer confidence marginally decreased to -17.2 in March from -17 in February due to a more negative view about past financial situation, as well as their future economic situation. However, consumers expect a significant improvement in their financial situation compared to last month. Consumers are also a little less prone to saving since uncertainty has reduced and have slightly higher intentions of major purchases.

Retail trade confidence rose to 11.5 in March vs 8.7 in the previous month driven by stronger reported past activity and lower inventories. However, business expectations for the future have decreased from the last month.

Construction confidence rose to -7.1 in March from -7.6 in February. This improvement in morale was driven by a slight increase in order books and stronger employment expectations.

At the European level, ESI for the EU decreased to 96.0 from 96.9 in February, signaling a slight deterioration of economic sentiment most likely due to political uncertainty.

Selling price expectations increased in manufacturing and construction, stagnated in services, and decreased in retail. Consumer price expectations for the next twelve months increased materially.

Employment Expectations Indicator (EEI) increased to 105.2 in March vs 102.6 in February with all sectors reporting higher hiring intentions, except retail.