Page 123 - SE Outlook Regions 2023

The credit quality is reflected by the improved non-performing loan
(NPL) ratio calculated under EBA methodology. The NPL ratio dropped
to 2.8% at the end of Q3, from 3.0% at the end of Q2 and 3.7% at the
end of Q3 last year. The ratio has constantly decreased since 2014
when first calculated – with a small increase in mid-2020 before the
moratorium on bank loan repayment enforced by the National Bank of
Romania (BNR).

3.9.3 Industry

Industrial production in Romania contracted by 2.6% y/y in
January-October and the government’s forecasting body expects only a
marginal recovery in 2023.

The high energy prices and the economic slowdown in Europe are the
main drivers for the bearish outlook after two years of the generally
declining volume of industrial activity in the country.

The industrial output index in Romania posted a marginal 0.1% y/y
contraction and an encouraging +3.5% y/y advance for the
manufacturing industries in October – but some sectors were severely
hit by the energy prices while those gaining ground are not many.

Thus, the output in the chemical industry plunged by 21.6% y/y in
January-October, according to data published by the statistics office
INS and the output in the metallurgy sector contracted by 12.2% y/y in
the same period.

The automobile industry posted a flat performance (-0.3% y/y) in the
10-month period, while the fabrication of other transport means
(tramways is a good example given the activity of local producer Astra)
posted a 7.2% y/y advance.

Oil processing has recovered from last year’s outage of Rompetrol
Rafinare and posted a robust 10.5% y/y advance. Even the robust
construction materials manufacturing sector posted a small 0.2% y/y
decline, visibly caused by the rising prices.

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