Recent Developments of Medium Technology Activities Specific to the Romanian Manufacturing Industry in the Context of the COVID-19 Pandemic and the War in Ukraine

The Romanian manufacturing industry was affected by two consecutive shocks in the form of the COVID-19 pandemic and the war in Ukraine. A number of factors, including global value chain disruptions and the increased volatility of domestic and foreign demand, have contributed to the output contraction of the manufacturing industry during the pandemic. The war in Ukraine generated a second shock to the economy, particularly to industry. The significant increase in prices, especially for energy, has led to increased production costs, negatively impacting the industry. In this context, the paper analyzes the dynamics of production in medium technology activities specific to the manufacturing industry in Romania and compares the dynamics in Romania with the main economies in the region and with the EU average. The paper also estimates two autoregressive vector models that allow for the econometric analysis of the impact on the medium technology activities of two shocks, one represented by the pandemic and the other by the significant increase in industrial producer prices. The econometrical results are consistent with the statistical data on the production dynamics during the pandemic and capture the high impact of the pandemic shock on manufacturing. The analysis of the impact of the industrial producer prices shock on medium-technology activities reflects the impact of the disinflationary trends during the pandemic period, especially the second and third quarters of 2020, as well as the strong inflationary shock generated by the war in Ukraine.