Although this rise is good news for consumption at a time when the cumulated decline between 2009 and 2011 neared 20%, analysts’ and retailers’ opinions are mixed. Some say this rise can be seen as a positive signal, marking the start of a longer period of growth. Others say this is only a correction, and that the consumer basket remains more or less the same.
Economic analyst Laurian Lungu believes the evolution of consumption in the first four months of 2012 against the similar period of 2011 signals the beginning of a downward trend for this indicator.
“This data is not the only indicator pointing in this direction. Real wages have also increased and non-government loans went up. Although there is a risk of a slowdown over the next few months, the probability of returning to a longer-term downward trend is small.” Lungu says though there is also the possibility of periods of anemic growth or even stagnation because the situation continues to be a difficult one.
RON500M go into the economy
However, as of June, the wages of public sector employees will be raised, with the measure to add around RON500 million to consumption. On the other hand, the depreciation of the leu in May could lower this amount, as the money will be allocated for the payment of bank installments for loans in foreign currency.
According to data from the National Statistics Institute, after the first four months of the year, there was an increase in retail against the similar period of 2011, both as gross series and as series adjusted for the number of working days and for seasonality, by 3.6% and 4.2% respectively. According to statistical data, the first signs of a consumption rebound came in the last few months of 2011, but the modest advance did not manage to offset the declines recorded earlier in the year, so consumption fell 3% for the full year.
“The growth in the first four months of the year is just a correction after a long period of decline for consumption of fast moving consumer goods. Moreover, I don’t think the situation is going to change significantly in the coming period. This rise is linked to the context and I think in the next period we will see only mediocre growth of 1% or even declines,” says Cristian Paun, who teaches at the Academy of Economic Studies in Bucharest.
A rise of 6%-7% is needed for a rebound
Paun says before one can talk about a lengthy recovery, the state needs to take pro-market measures, which has not happened in the past few years. “So far, with these mediocre advances, we have not managed to even recoup what we lost in 2009. We need rises of 6%-7% in order to see a genuine recovery.” But he doesn’t think this will happen very soon.
His opinion is shared by Sorin Minea, president of the Romalimenta federation. He says if the economy doesn’t grow and the leu continues to depreciate, the possibility of consumption showing clear signs of revival over the next few months is weak.
(English version by Daniela Stoican)