Increase in construction works volume in Romania by 0.8% year-on-year observed during April-May period.
Romania's construction industry is experiencing a period of initial strong growth, with an 8.5% rise in activity compared to 2024, primarily driven by infrastructure projects and a modest recovery in residential construction [1][4]. However, non-residential construction has seen a decline of nearly 2% due to weaker private sector demand and investor caution [1][4].
Infrastructure projects, such as public works, have been leading the growth, with a significant 15.5% increase [1]. The sector's future, however, depends heavily on fiscal stability, effective use of European funds, and consistent public infrastructure investment [1][3][4]. The government's reconsideration of budgets for public works could introduce uncertainty [1].
On the residential front, although household interest is somewhat impacted by uncertain incomes, residential building permits are still slightly up by 0.6% year-on-year in early 2025, signaling continued but cautious demand [5]. The residential market focus is shifting from quantity to quality and sustainability, emphasizing durable construction, reliable developers, modern amenities, and prime locations [2].
The non-residential construction segment has been stagnant for more than three years [2]. The combined growth rate in the first two months of the second quarter was a modest 0.8% y/y, with the non-residential construction works volume contracting by 2.4% y/y, and the residential construction segment contracting by 4.9% y/y [1].
The construction sector's performance in April-May was modest, following a 10.6% y/y surge in Q1 2023 [1]. The non-residential construction segment has been stagnant for more than three years, 20% above the average level in 2021, while the residential segment in April-May 2023 was at 80% of the average 2021 level [1][2].
The civil engineering segment, on the other hand, has seen increasing activity for the past couple of years. The civil engineering works volume in April-May 2023 increased by 4.8% y/y, with the civil engineering segment in April-May 2023 at 160% of the average 2021 level [1]. An outstanding volume of works in the civil engineering and residential segments was registered in November-December 2023 [1].
The 5.9% y/y decline in 2024 may be misleading due to an irregularity in the market at the end of 2023 and the beginning of 2024 [1]. The average seasonally and workday adjusted construction works index in April-May 2023 was 0.5% higher compared to the average in the first three months of the year [1].
In conclusion, Romania's construction sector in 2025 shows promising early momentum, especially in infrastructure and improving residential quality, but faces risks from public budget uncertainties and cautious private investment, leading to a likely mild slowdown in late 2025 [1][2][3][4][5]. The sector's future is closely tied to the government's budget decisions and the absorption of European funds, as well as the continued demand for high-quality, sustainable residential developments.
The growing infrastructure projects, driven by public works, have been fueled by a significant 15.5% increase in the industry [1]. On the other hand, the finance sector plays a crucial role in the non-residential construction segment, as it depends heavily on investor confidence and private sector demand [1][4].
