X-Trade Brokers: The End Of The Crisis Is Still Far In The Future

• Construction industry continues to decline

• Focus on future economic growth must be shifted to other industries

The latest statistical data about the construction industry indicate that the crisis in Romania will prolong, according to analysts from X-Trade Brokers. The construction industry plunged a record 14.2 per cent in the second quarter compared to the first quarter and then lost another nine percent in July from June. The overall construction industry in the European Union lost only 1.1 percent month-on-month in July. Moreover, official statistics indicate that the number of property transactions recorded in the first six months of the year was by 26.25 per cent lower year-on-year, according to the report released by the brokerage firm.

"The dynamics of the construction industry and the real estate industry are extremely important for any forecast regarding the end of the crisis in any country. Romania is no exception, especially considering that, much like in Spain, the economic growth before the crisis was based on these industries," according to Victor Safta, the Managing Director of the Romanian subsidiary of X-Trade Brokers.

He further explained that, of all the European Union countries, Romania had suffered the most severe decline in constructions in July compared to June. "Although the future economic growth after the crisis will be more balanced and better consolidated on more industries, as it should, this information is a clear signal that the end of the crisis is far in the future," Safta added.

The construction industry in Slovenia and Spain also suffered significant setbacks of (-)4.6 per cent and (-)4.1 percent. Spain"s case remains quite similar to Romania"s, as the country also used to rely too much on the construction and real estate industries. Once the country with the fastest growth rate in the Euro Zone, Spain is now suffering a severe slowdown, having lost 4.1 per cent of the GDP in the second quarter on a year-on-year basis and one per cent compared to the previous quarter.

A busy construction industry is a clear sign of economic growth in any country, indicating a rising demand for housing, office space and production facilities, according to the X-Trade Broker analysts.

"Romania continues to be excessively and unhealthily focused on construction. Spain is a good example in this respect, if need still was for an example, considering that Romania is clearly feeling now the effects of excessive dependence on one particular industry. We expect that, in the period of economic growth following the current crisis, the construction and real estate industries will lag behind and start growing only after other industries, which will benefit the Romanian economy as a whole, as the structure of its growth will be more solid and balanced," Victor Safta further said.

X-Trade Brokers is a brokerage firm established in Poland in 2002. The firm currently has subsidiaries in the Czech Republic, Slovenia, Spain, Italy, Germany and Romania, being licensed and supervised by the local securities market regulators.