Constructions sector drags economy down

The constructions sector, one of the biggest drivers of economic growth over the last three years, alongside services, ended up dragging the economy down – it recorded a major decline in the second quarter of the year against the similar time last year, 14.2%. The economy tumbling by 8.7% in the second quarter of the year compared with the corresponding period of 2008 did not take analysts by surprise, who were expecting a slowdown in the industry’s decline and the deterioration of activity in the other sectors. While the industry appears to have emerged from the crisis, with future prospects being optimistic, in the case of services, which account for around half of the GDP, signals point to a slow recovery, whilst the constructions sector could stay down over the next few years. “Activity in the constructions sector is likely to remain modest for a long period of time – 1-2 years – because the government will find it difficult to finance a lot of its projects in the coming period, and demand in the residential sector is not very likely to recover after the speculative bubble burst,” commented Nicolaie Chidesciuc, chief-economist of ING Bank.