Dallas, Texas (PRWEB) December 29, 2013
The Romanian construction industry grew significantly in the two years between Romania’s entry to the European Union in 2007 and the global economic crisis in 2009. The construction industry in Romania contracted during the crisis as the country entered economic recession from the third quarter of 2008. The industry registered a CAGR of 2.85% during the review period. The construction industry’s growth is expected to grow over the forecast period, as a result of government focus on infrastructure and residential construction. The industry’s output is expected to record a CAGR of 6.55% over the forecast period.
The Romanian construction industry suffered a recession and slowdown in output due to the financial crisis in 2009. The country recorded a small recovery in 2011, and continued to show signs of recovery until 2012. From January to May 2013 the construction production index recorded an average decline of -7.7%, but began to grow during June-September 2013 as the index grew by an average of 5.1%. This indicates that the industry is still fragile and failing to match its pre-financial-crisis growth rates, but is displaying signs of stability as a basis for sustained recovery. This growth is largely attributed to the increase in the real estate prices and strong support from public investment. According to the National Institute of Statistics (INS), the economy grew by 4.1% in the third quarter of 2013 compared to the same period in 2012.
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According to the World Economic Forum’s Global Competitiveness Report 2013-2014, Romania ranked 106th out of 148 economies in terms of overall infrastructure quality. The quality of its roads ranked 145th, the quality of its rail infrastructure ranked 82nd, and the quality of its ports ranked 123rd. The government is investing heavily to improve the country’s infrastructure and make it more effective for transport and logistics.
In Transparency International’s Corruption Perception Index 2013, Romania is ranked 29th out of the 31 countries in the European Union (EU). The country’s relative difficulty in conducting business and its high level of corruption creates a barrier of entry for new construction companies. In July 2013, Romanian Transport Minister Relu Fenechiu was sentenced to five years in jail on charges of illegally selling second-hand electrical equipment as new. Corruption of this nature is common, and damages the reputation of the construction industry.
According to the INS, the country’s exports increased by 8.4% in the first three quarters of 2013, whereas imports decreased by 0.7%. In the second half of 2013, the Romanian government devised a new strategy to increase exports to China, the US, Russia and Arab countries over 2014-2020. The strategy involves the implementation of an advocacy group consisting of multinational companies, banks and foreign business consultants to direct the government in increasing exports and industrial capacity.
The Romanian government is introducing a tax on special construction projects, which would result in a yearly cost of RON178,525 (US$55,104) for each wind turbine in Romania. This could generate an added cost of RON133.9 million (US$41.3 million) for the entire renewable energy sector in Romania, according to the Association for Wind Energy. As a result, construction in the renewable energy sector could be reduced.
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