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Tuesday, July 29, 2008

Construction and Forex Lending Still Booming In Romania

Romanians were awarded 6 percent more homebuilding permits in June than in June 2007 as higher wages and a lending boom continued to drive construction activity. The government issued 6,137 homebuilding permits last month, compared with 5,791 in June 2007, according to the latest data from the National Statistics Institute. Month on month permits awarded were down 2.4 percent from May.

Rising wages, a lending boom and growth in real estate prices have given Romanians more money to invest in housing. Wages increased an annual 23.3 percent in May:

Bank lending continued to drive up debt - both corporate and household - at a very fast annual rate again in June, according to the latest data from the Romanian central bank.

In June 2008, totat non-government credit grew 3.7 percent, or 3.4 percent in real terms, from May 2008 to reach RON 178,180.2 million. RON-denominated loans went up 2.1 percent (1.8 percent in real terms) and foreign currency-denominated loans rose by 5.0 percent when expressed in RON and by 4.3 percent when expressed in EUR.

At end-June 2008, total non-government credit was up year on year by 63.4 percent, or 50.5 percent in real terms, on the back of the 40.0 percent increase in RON-denominated loans (28.9 percent in real terms) and the 89.3 percent advance in foreign currency-denominated loans expressed in RON (when expressed in EUR, forex loans expanded by 62.7 percent).

Romania's construction industry, including commercial and engineering works, expanded an annual 34 percent in May, the fastest pace in the EU.

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