Romania's main maritime facility, the port of Constantza, once again will see steady growth in 2015, according to BMI forecasts, both in terms of total tonnage and container throughput, in line with the country's continued economic recovery and despite tepid eurozone demand limiting exports to the region.
We expect, however, that low inflation, cheap borrowing costs and improving labour market conditions will conspire to drive a recovery in private consumption, which will play an increasingly large role driving growth and supporting freight volumes at the country's ports.
We forecast further growth at the port of Constantza and the recovery of its pre-downturn total throughput volumes over the medium term. Container throughput, however, is projected to remain below 2007-2008 level.
Headline Industry Data
2015 port of Constantza tonnage throughput forecast to grow 4%, over the medium term we project a 21% increase.
2015 port of Constantza container throughput forecast to grow 4%, over the medium term we project a 20% increase.
2015 total trade growth forecast at 5.75%.
Key Industry Trends
ADM Enhances Europe an Presence by Acquisition at Constantza: Commodity trader Archer Daniels Midland (ADM) acquired complete ownership of North Star Shipping and Minmetal in May 2015 to enhance its European origination and logistics network by adding export facilities at the port of Constantza. The target companies operate grain elevators and bulk commodity storage and warehousing, also offering port services, stevedoring operations and a shipping agency at the mouth of the Danube River. ADM was previously a partner in both North Star and Minmetal, owning some 45% of the Constantza assets.
Risks t o Outlook
The potential for growth at the country's ports stems from BMI's positive outlook on the Romanian economy. Container throughput will be driven by the country's consumers, with consumer demand in Romania forecast to strengthen. The country's real GDP is estimated to increase by 3.4% in 2015.
The main risk to our outlook is for a more significant softening of external demand from core eurozone economies. This would impair exports and will have an adverse effect on the country's large manufacturing sector. A downside risk to our forecasts comes as a result of Romania's heavy exposure to the eurozone and the region's possible weaker-than-expected recovery over the coming quarters, which would weigh on export growth and industrial production going forward, weakening demand, and so affecting the country's ports and freight transport network. Constantza's role as a gateway for trade to and from landlocked Central Europe may also be affected.
A further downside risk to our forecasts of freight volumes at the country's ports is related to a situation in Ukraine. Although Romania is less exposed to the crisis in Ukraine than a number of regional peers, if fighting resumes, there is potential for spillover impacts to be felt in Romania, possibly through further damage to trade with both countries and an increased migration from Ukraine, weighing on investor confidence in the region. This could lead to lower growth than we currently anticipate.
Upside risks to our short and medium term forecasts stem from expansion projects; potential foreign investment and interest; and improving domestic demand in the euro area, in particular in Germany, which might prove supportive of sustained export growth over the coming quarters.