XPRIMM News No. 162, August 26th, 2010

About climate change... in the middle of this hot summer

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by mihaela.circu@mxp.ro

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Interview with Mihail TECAU
President of the Board
BCR Asigurari VIG

by andreea.ionete@mxp.ro

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Mihail TECAU
President of the Board
BCR Asigurari VIG

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Romania's car production could increase by 74.5% until 2014
Romania's total car production could reach as many as 520,000 vehicles per year by 2014, according to the latest PricewaterhouseCoopers (PwC) Automotive Institute analysis. This would represent a 74.5% increase compared to the production level of the local automotive industry in 2009. Romania would thus be the third fastest growing market in terms of production capacity in Central and Eastern Europe, behind Ukraine (242% increase by 2014) and Russia (235%).
In terms of total car production volume, Romania will be the sixth largest auto producer in the region by 2014, behind Russia, Turkey, the Czech Republic, Poland and Slovakia, but ahead of Hungary, Ukraine and Slovenia.
"Car assembly in Eastern Europe is primarily driven by domestic demand, but also aided by export programmes, predominantly to EU countries. The gradual phasing down of the car scrappage schemes, as well as the fiscal tightening that will take place in many EU countries in the next few years, will have a negative effect on the demand for new cars in the common EU market. However, we anticipate a strong growth rhythm for the Romanian auto industry in the next 5 years, as recent investments in the Craiova plant will become fully operational and the Pitesti plant will have its production capacity increased to meet rising demand for newly launched car models", says Ionut SIMION, Tax Partner, Leader of the Automotive Group of PwC Romania.
On a global level, the difference between car sales and assembly so far in 2010 shows that a return to equilibrium is still some way off. Excluding inventory, global car production and sales are usually in balance, but crisis-based decisions of early 2009 have caused the automotive industry's normal equilibrium between sales and assembly to fall noticeably out of sync.
"Residual effects of the widespread car industry crisis have altered the traditional relationship between light vehicle assembly and sales. As automotive industry recoveries take different shapes in mature and emerging markets, regional responses to the downturn are creating highly variable assembly and sales figures that are masking underlying dynamics", stated Ionut SIMION.
PwC finds that the most significant factor within the global auto industry in 2010 is resilient light vehicle assembly. The Automotive Institute data indicates that, for twelve leading car producing countries, light vehicle assembly through to the end of May improved an astonishing 47.6% over the same period in 2009. Although this trend could be viewed as an indication that a broad recovery is now underway, PwC highlights that the uptick is almost entirely a result of the first half of 2009 being exceptionally weak as car makers engaged in massive assembly and inventory reductions, fearing a precipitous worldwide sales crash.
Recently, reports of remarkable auto industry growth of this magnitude are invariably attributable to China. But in this case, removing China from the global assembly total still produces an impressive year on year improvement of 44.4%. On the sales side however, China's performance had a major impact. Removing China from the sales equation reduces sales growth in the same period from 22.2% to 12.9%.
Rebalancing global sales and assembly continues to be complicated by the evolution of very different regional recoveries. Mature markets like Europe, that preserved assembly and sales volume with scrappage programmes in 2009, are now preparing for an impending period of slowed industry growth as government stimuli wind down and financial challenge persist.
Despite its mature market status, North America's first half recovery is markedly different due to an inventory-correcting light vehicle assembly surge (+70% year on year), amidst a weakened sales environment that risks stagnation in the second half of 2010.
Conversely, emerging markets like China that generated both organic and incentive-driven growth in 2009 have largely continued posting unprecedented gains in 2010. Yet, even China may witness slightly softer market conditions in Q3/2010 with more moderate economic growth projections and elevated potential for incentive exhaustion.
"While year-to-date assembly growth figures fundamentally overstate the extent and widely varied nature of global industry recovery, PwC's outlook reflects optimism toward industry revival", concluded Ionut SIMION.
by wall-street.ro, 24.08.2010

Romania, third in EU for industrial new orders
The euro area industrial new orders index rose by 2.5%, in June 2010 compared with May 2010, EUROSTAT informs. In May, the index increased by 4.1%. In the EU27, new orders increased by 2.4%, in June 2010 after a rise of 4.0% in May. Excluding ships, railway and aerospace equipment, for which changes tend to be more volatile, industrial new orders grew by 1.6% in the euro area and by 1.8% in the EU27.
In June 2010 compared with June 2009, industrial new orders increased by 22.6% in the euro area and by 22.5% in the EU27. Total industry excluding ships, railway and aerospace equipment rose by 22.5% and 23.7% respectively. In June 2010 compared with May 2010, new orders for capital goods rose by 5.3% in the euro area and by 5.1% in the EU27. Intermediate goods increased by 0.1% and 0.3% respectively. Durable consumer goods fell by 1.1% in the euro area and by 0.1% in the EU27. Non-durable consumer goods decreased by 1.8% and 0.9% respectively.
Among the Member States for which data are available, total manufacturing working on orders rose in sixteen and fell in four. The highest increases were registered in Denmark (+23.0%), the Netherlands (+8.9%) and Romania (+5.5%) and the largest decreases in Ireland (-4.7%) and the Czech Republic (-2.7%).
by nineoclock, 24.08.2010

Romania's public debt slightly ebbed in June at 34.6 pc of GDP
Romanis' public debt ebbed in June compared to May by RON 1.45 billion, amounting to 34.66 percent of GDP, as the Minister of Public Finance (MFP) took less money on loan from banks by internal emissions of state bonds. In nominal terms, the debt ebbed at RON 176.9 billion and 93.8 percent of it is accounted for by the government's public debt. The Ministry of Finance took, in June, only RON 957 million in loans by issuing state bonds and treasury certificates, about RON 1.5 billion below last month's figures, when the loans amounted to RON 2.53 billion. Since May, the Ministry of Finance sold, in most cases, state bonds below the indicative value, refusing offers which called for yields above 7 percent a year. In structural terms, the debt at the end of June was made up, in a 41.7 percent ratio, of state loans, while the issues of bonds and certificates amounted to 33.15 percent, and Eurobonds claimed 8.26 percent of the total. As regards currency, the largest share of the public debt, that is, 43.44 percent, was, at the end of June, in RON, while 42.16 percent of it was in EUR. Loans in other currencies accounted for approximately 15 percent of the total. For the next three years, the Ministry of Finance envisages contracting loans from external markets in a medium-term funding program (Medium Term Notes), amounting to EUR 7 billion.
On the other hand, economists say the way Romania's public debt is currently structured is "unhealthy", with quite a large share of short-term securities that may pose a risk to the economy, HotNews reports. "The state of play is that we have quite a high public debt rolling effort on a short term, which may expose us to specific risks", RAIFFEISEN Bank Chief Economist and Chairman of the Fiscal Council, Ionut DUMITRU, said.
The economics professor Daniel DAIANU claims that, while there is no fiscal consolidation, with markets realising there is no budget deficit declining trend and that temporary solutions are being employed, maturities almost inevitably tend to become shorter and shorter because the lender has no more confidence in the borrower. "If it does not do it, the Government cannot pursue a strategy for the improvement of state securities' maturities", DAIANU also explained.
by nineoclock, 23.08.2010

Romanian Senate approves National Integrity Agency bill
A new law on the functioning of the National Integrity Agency (ANI) - a key body supervising the wealth of public officials - was approved by the Romanian Senate convened in extraordinary session on Tuesday, the 24th of August 2010. The document was adopted with 78 votes in favor, one abstention.
The Senate is the deciding chamber in the case of the ANI law.
The document was adopted with the support of Liberal senators, who said they would support the bill despite they considered it "rather unconstitutional". Social Democratic senators for their part had said they would note vote on the bill.
Deputies adopted the bill last Monday. President Traian BASESCU had decided on the 20th of July to convoke the Parliament in extraordinary session to discuss the legislation along other projects.
by hotnews.ro, 24.08.2010

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