Macroeconomy
* Economic growth will slow down towards 2%, after the about 3% increase of 2013. Foreign demand will continue to drive Romania’s economy, and domestic demand may rebound, gradually, too, while agriculture will have a modest contribution to it.
* Inflation will continue to fluctuate around the 1.5% low in the first few months of the year and then go up towards 3% to 4%.
* The leu might fluctuate between 4.35 and 4.65 units to the euro. The depreciation risks have to do with the monetary policy changes in the USA and with the return of political turmoil given the domestic electoral pressures.
* Budget deficit will stand at about 2% of the gross domestic product and the fiscal adjustment is set to continue.
* Exports will rise again at a double-digit rate as they did in 2013, and will remain one of the main growth drivers of the GDP.
Banks and insurance
* BCR, the largest lender in the economy, is expected to emerge from its unprecedented restructuring process and retake its place on the funding market, driving the growth of leu lending as interest rates decline.
* Small banks that can no longer rely on support from shareholders, such as Marfin and Millennium, could sell, continuing what RIB, ATE Bank and Nextebank started last year.
* A solution to the tremendous burden of non-performing loans of more than EUR10 billion could be found if a secondary bad debt market is created with the help of foreign financial institutions.
* 2014 could truly be the year of the leu lending as the central bank, BNR, will continue to reduce the key rate and also lower the minimum reserve requirements, so the cost of borrowing will become comparable to the euro loan costs.
* At least one major foreign-owned insurer will leave the market in 2014 and the gross written premiums will increase by no more than 5%. The Financial Supervisory Authority, ASF, will revoke the license of a major auto liability policy (RCA) vendor either temporarily or permanently.
Energy
* The Romanian government will announce the new oil royalties by the end of the year, which will be one of the hottest topics of negotiations in 2014. The level of said royalties is the lowest in the European Union and five or six times lower than in the Arab countries.
* A second deep sea well will be drilled in the Black Sea, after OMV Petrom and Exxon’s Domino-1 identified a significant gas deposit.
* The increase in natural gas price will put significant pressure on the industry this year.
* Construction on a EUR1 billion thermoelectric power plant by China Huadian Engineering should begin in Rovinari this year and a final agreement for the investment in the two new reactors of Cernavoda nuclear power plant might be signed with another Chinese company, General Nuclear Power Corporation.
* Energy consumption will continue to decline, this time by some 4%, which means greater pressure on the thermoelectric power producers. The price increase might also lead to a decline in natural gas consumption, as well.
Automotive
* Sales of new cars will go up by 10% at best in 2014, reaching 68,000 cars from 62,000 in 2013. Second-hand sales will steady after an increase of 30% to 250,000 last year.
* Car production will drop 10% in 2014, after seeing highest volumes ever manufactured in Romania and coming close to the 400,000 car mark. The record was made possible by the launch of the new generation of Logan, Sandero, Logan MCV and Duster.
* Component production will keep the local automotive industry going this year again. Daimler has a state of the art transmissions plant in Sebes, and Continental and Bosch are conducting programs focusing on systems for self-driving cars in Timisoara and Cluj.
* The year 2014 will be the last year for the government-backed cash for clunkers program. It will start in March, when 20,000 vouchers worth EUR1,500 each will be issued.
* The environment stamp duty for cars in force since March 2013 will be levied this year, as well, even though the imports of second-hand cars surged 30% to more than 220,000 units, while new car registrations fell by about 15% to some 55,000.
Retail
* Mega Image will continue its fast-paced expansion of the last couple of years, and will open about 100 new stores in 2014.
* The retail market will grow by up to 10% this year, largely from new store openings and less from consumer spending rebound. It grew only 10% also because of expansion in 2013. Like-for-like sales dropped by 2% to 3% on the overall market in 2013, with a similar decline expected in 2014.
* Private label products developed by retailers will get closer to a 20% share of the local retail market from 15% in 2013 and 1% a decade ago. Sales of Aro (Metro), Clever (Billa) and K-Classic (Kaufland) will exceed EUR3 billion in 2014.
* New fashion brands like Primark and Top Shop will enter the Romanian market, encouraged by the presence of industry heavyweights like Zara, H&M and C&A.
* Start of online battle. After Carrefour and Cora, Belgian-held retailer Mega Image announced intention to sell groceries online.
Pharmaceuticals and healthcare
* Health Ministry will introduce the basic service package in March, which includes the services patients have access to via the healthcare system.
* GSK will most likely not find a buyer for the Europharm plant in Brasov and close it. Europharm is one of the largest local pharmaceutical exporters, with EUR104 million revenue and 250 employees.
* National Health Insurance House will complete the health card project two years later than initially announced.
* Health Ministry will conduct a pilot project to change the hospital status and raise physicians’ salaries.
* The pharmaceutical market will go up by no more than 5% after the Health Ministry approves new products for the subsidized drug list.
Real estate and infrastructure
* The highway network could increase by almost 70 kilometers in 2014 on the following routes: Nadlac-Arad (39 kilometers), Orastie-Sibiu (a 22 kilometer section) and Bucharest-Ploiesti (a 6.5 kilometer section).
* The local construction sector put at EUR8.5 billion to EUR9 billion last year should be flat this year. If the government starts spending in full gear, the sector could see growth.
* The apartment prices will continue to decrease given the lending restrictions and the still unabsorbed supply on the market. The decline should reach 5%.
* No more than three medium-sized shopping centers will be delivered in 2014 in cities like Bucharest, Brasov and Targu-Jiu, as most good locations are already well served.
* Few office developments will be announced in Bucharest: Ioannis Papalekas is starting work on a tower next to the Promenada Mall in northern Bucharest, NEPI will begin work on a project in Piata Victoriei (Victory Square city center). Deliveries of office space in the city will amount to some 100,000 square meters.
IT&C
* With more than 2 million TV sets, tablets and smartphones sold this year and growing Internet access, websites, mobile apps and online interaction with customers will become even more important.
* Mobile Internet market will surge. Orange, Vodafone and Cosmote will launch higher 4G speeds and wider coverage in April, and RCS&RDS will expand its mobile network onto a new frequency.
* Pressured by termination rate cuts and the “Ponta tax”, which includes cell towers, among others, telecom operators will pay even more attention to their spending. It will be a year of consolidation, with the Cosmote-Romtelecom merger as the highest profile event.
* Sales of tablets, smartphones and smart TVs will continue to increase, amid fierce competition among producers.
* 2014 should be the year of efficient government investment in IT&C and of projects meant to cut red tape.
Stock market
* Traded value will go up by at least 20% and the Bucharest Stock Exchange will meet the requirements to be promoted to emergent capital market status. Its BET index rose by 26% in 2013.
* Energy sector will be the star of the stock market in 2014 because of the new initial public offerings scheduled for this year (Hidroelectrica, Electrica, CE Oltenia). Energy stocks will perform better than the market.
* Fondul Proprietatea will speed up sales of assets and launch a new share buyback program.
* International markets will have a much more hectic year than 2013. US may see a 5% to 10% correction during the year, which will also affect the Bucharest Stock Exchange.
* Mutual funds’ assets will increase by more than 15% fuelled by the decline in bank deposit interests. Equity funds will reign as most profitable investments.
Agribusiness
* Next summer’s wheat harvest will be at least 6 million tons, as local farmers have boosted fertilizer, seed and pesticide spending in the last few years, compared with 7.4 million tons in 2013.
* Domestic milk production will drop by at least 20% to 700,000 tons, considering 2014 is the first year when the ‘milked by hand’ milk will no longer be allowed for sale in markets and for purchase by processors.
* Foreign individuals, companies and private equity funds will buy tens of thousands of hectares of farmland in Romania because the asset is still undervalued compared with Western Europe.
* Agribusiness companies will build silos and storage facilities with at least 1 million tons in total capacity, driving Romania’s storage capacity up to about 19 million tons of grain and oilseeds.
* 2014 will be the second year in two decades when Romania is a net exporter of food after local companies reversed the trend in 2013 and exports beat imports.
(English version by Loredana Fratila-Cristescu)