MACROECONMY
* Economic growth will remain sound unless a serious crisis hits from abroad. Romania will see 3.5% to 4% economic growth.
* GDP will amount to more than 1,000 billion lei (over EUR200 billion).
* The leu will lose ground to the euro but not much – the average exchange rate will reach 4.7 lei to one euro (4.66 lei/euro at the beginning of the year).
* Annual inflation will probably drop to less than 3%.
* ROBOR, the big unknown after the introduction of the banking tax, will probably fluctuate between 2% and 3%.
TAXATION
* The first quarter will show the ripples in the economy caused by the new taxes banks and companies must pay. All bets are open from now on.
* The complicated thing here is the consolidated general budget. The current scenario points to a fiscal deficit heading towards 5% of GDP. New taxes are therefore not out of the question.
* Government promised 2019 would be the year of “investments”. The tremendous budgetary constraints could force it to cut spending, and the investments will be the first to go.
* Minimum wage went up 10% as of January 1, 2019, to RON2,080 in gross amount. No further raises are scheduled for this year.
* Fiscal policy is secured by the two rounds of elections (European Parliament and presidential elections) because politicians will not undertake to hike taxes in election years.
BANKS
* New rules for banks in 2019 after the Finance Ministry decided to introduce the ‘greed tax’ and the Parliament approved a set of three laws while Romania’s central bank decided to cap the amount of debt a consumer may take on.
* Lending could slow down.
* New central management to be selected for Romania’s central bank.
* Banking system restructuring to continue. Consolidation may, too.
* Banking system will probably remain in the black, but profits will be lower and the number of banks in the red may increase.
FOREIGN INVESTMENT
* Investment projects will amount to EUR2.5 billion, set to create 24,000 jobs.
* New projects in the automotive, automotive component, IT, financial services and outsourcing sectors.
* Competition to get projects eligible for state aid to continue, as it does in other Central and Eastern European countries.
* Attempts to attract investment form China, Japan and US as investments from EU members have stagnated in the past few years.
* Pressure to attract high added value investments in top industrial sectors will increase.
ENERGY
* Potential insolvencies of power suppliers, following the new 2% taxes on revenue the government introduced.
* The year of the major Black Sea decisions: OMV and Exxon must announce in the first quarter of 2019 whether the natural gas deposit is commercially viable.
* Deregulation of the energy market cancelled for household consumers considering the cap on the power price.
* Although there has been talk about Hidroelectrica going public for several years now, it will most likely shelve the plan in the light of the new taxes.
* Gas price will either be flat or drop in 2019, analysts say, in line with late 2018 trend.
CONSTRUCTION
* Companies will receive a boost from the enforcement of the steps the government announced in December – the employer will be exempt from social security taxes, employees will pay 3.75% lower social security taxes and the minimum wage in the sector will be RON3,000 in gross amount per month.
* Several over EUR100 million investments in progress at the moment, built by both Romanian and foreign companies.
* Production of Rockwool (mineral wool), Policolor (paints and coatings), Peikko (steel structures) plants is expected to begin.
* Significant doubt whether cement production returns to growth following the 10% decline in 2018.
HOMES
* Buying a second home subject to a 5% VAT tax if it costs no more than RON450,000 will be a breath of fresh air for the residential market if the bill is approved.
* Old three-room apartment prices, which currently average at EUR90,000, according to the ZF real estate index, will either remain flat or go up by no more than 10%.
* Number of loans to buy a home might go down, following the cap introduced by Romania’s central bank for mortgage loans.
* The First Home scheme might slow down and get 25% lower funding.
* New residential projects to be built near the office buildings in the north and west of Bucharest because employees want to spend as little time on the daily commute as possible.
TRANSPORT & LOGISTICS
* Fast progress towards the 5 million square meter of logistics and industrial space mark.
* Air traffic growth should stabilize at around 10% growth in 2019.
* New players expected to enter the transport and logistics market like in the previous years.
* There might be new deals in the sector after a less than stellar 2018.
* State-run transportation companies will have a difficult 2019 due to the lack of upgrades.
TRAVEL
* Holiday vouchers will generate growth for hotel operators and travel agencies, following a very good 2018.
* Hilton Garden Inn at the airport, Moxy by Marriott in the Old Town and Courtyard by Marriott in Floreasca are due to open in Bucharest this year.
* Number of incoming tourists to increase at a double-digit rate.
* As Romania becomes more attractive to foreign tourists, foreign groups will start to buy hotels from entrepreneurs.
* Number of Romanians choosing to vacation abroad will go up this year, too, and the low-cost airline offers will again persuade them to travel more often.
HEALTHCARE & PHARMACEUTICAL
* Appetite for deals to remain high in pharmaceutical retail as market actors attempt to strengthen their position on the market.
* Acquisitions in the private medical service sector will continue.
* Public healthcare system to see further delays of major hospital infrastructure projects.
* Drug shortage – a constant problem year by year.
* Transplant Agency on the Health Ministry’s list of reforms.
* Personnel shortage still causes headaches to private healthcare service providers.
CONSUMER GOODS
* Retail sales to up by 4% in 2019.
* Local market is doing well, which will lead to more and more deals, either local mergers or entry of foreign players.
* Companies to bet on exports, as domestic consumption will no longer go up by any more than 10%.
* Craft beer and premium Romanian wines are gaining ground.
* Natural product trend to continue this year, as well, so major producers will invest again in launching additive and preservatives-free products.
AGRIBUSINESS
* Local farmers start the year with an appetite for investments in developing their farms, while the major farming businesses are entering the radar of the major foreign investors in the sector one by one.
* Al Dahra, an Abu Dhabi-based agribusiness group is looking for new acquisition targets after having bought Agricost in 2018.
* Agricultural cooperatives have been growing year by year and farmers intend to continue the trend this year. There were more than 900 agricultural cooperatives in Romania in 2018.
* The program to stimulate tomato production will continue. Romanian farmers got EUR3,000 subsidies to grow tomatoes in greenhouses in 2018.
* Deals involving farmland will continue as the major farms consolidate. A hectare of farmland now costs EUR4,000 to EUR5,000.
RETAIL
* An over EUR400 million deal, the sale of Metro Romania may enter the finishing strait.
* At least one of the last stands of the Romanian-held retail may fall – either Annabella, Zanfir or Elan Trio.
* Major retail chains will continue to rally to the `Made in Romania’ trend.
* Stores will become more of an online-offline mix.
* One thing to watch: the impact of electronic cash registers.
INSURANCE
* Decreased reliance on the auto liability (RCA) insurance sector and focus on the non-auto market.
* Repositioning on the market, following the new changes to the auto liability insurance law.
* Profitability and capital of insurers still under pressure.
* Excitement on the health insurance market may continue.
* Consolidation, restructuring of auto insurance market.
AUTO
* Ford Romania is getting ready to overshoot 200,000 Craiova assembled car mark.
* Dacia headed towards 350,000, following launch of new engine options for Duster.
* In the absence of an environmental stamp duty, imports of used cars will remain at over 350,000 to 400,000 units a year.
* Clunkers program will continue to help refresh the total stock of cars in the country.
* Sales of hybrid and electric cars to go up driven by bonuses offered by the government.
OFFICE SPACE
* Office space rental market set to increase fast in 2019 following new deliveries in Bucharest.
* New deals of over EUR100 million involving office space projects expected in 2019., as well, once new buildings are completed.
* Yields will continue to shrink slightly in 2019, once new projects are up for sale.
* As projects increase in size, international investors will become more and more interested in the office space market in Romania.
* Rents will go up in the areas with no new developments.
CAPITAL MARKET
* Government could ask for money from its subordinated companies, which includes those listed on the stock market, for the third year in a row.
* Liquidity will drop sharply compared with 2018 and could lead to closure of brokerage firms in Romania.
* Pillar II (mandatory private pension system), the only long-term buyer on the stock market and one of the last institutional investors is on its last legs, due to the new share capital requirements introduced by the government.
* Bucharest Stock Exchange might add new issuers to its main index BET in 2019, such as Alro Slatina.
* No more double-digit yields.
LABOR MARKET
* Average wage will go up by more than 10% to over RON3,000 in net amount in 2019.
* Number of employees to exceed 5 million people, but the economy will not be able to create more than 100,000 jobs in 2019 due to labor shortage.
* New services centers will open in medium-sized cities because large cities are already saturated.
* Number of workers ‘imported’ from Asian countries will increase but will not fix the labor shortage problem.
* Companies will optimize labor costs further.
IT
* Will the Romanian IT industry be able to generate another unicorn after the spectacular success of UiPath in 2018?
* Expansion of electronic commerce will continue in 2019 at double-digit rates mainly on the fashion, home&décor and toy segments, as well as on various niche categories.
* Automation and artificial intelligence solutions will transform and improve efficiency of businesses, especially in the finance-banking, insurance and telecom industries.
* Net average monthly incomes of programmers will go up to RON7,000 from RON6,400 in 2018.
* The number of IT employees will increase, partly because of deals and opening of new services/development centers in Romania.
TELECOM
* The tax on revenue and the at least EUR1 billion the Romanian government expects to get from the 5G auction will put significant pressure on operators’ budgets.
* Internet services will remain the growth driver of the telecom market.
* Competition on the fixed-mobile services market will increase with the acquisition of UPC by Vodafone.
* Demand for Internet of Things solutions will increase.
* Pressured by higher content costs, taxes and low margins, operators will continue to seek ways to consolidate the market.
(English version by Loredana Fratila-Cristescu)