Romania’s GDP rose by 5 pct in Q1 2019 beating expectations

Sorin Melenciuc 15/05/2019 | 09:23

Romania’s gross domestic product (GDP), the index widely used to measure the size of national economies, rose by 5 percent year-on-year in the first quarter of this year, the highest pace since Q4 2017, beating all expectations, according to National Institute of Statistics (INS) flash estimate released on Wednesday.

The Romanian economy grew by 5 percent (gross series) an by 5.1 percent (seasonally adjusted data) compared with the first quarter of 2018.

Compared with Q4 2018, Romania’s GDP rose by 1.3 percent in Q1 2019, the 10th quarter in a row of increase.

Flash estimate data don’t disclose the drivers of GDP growth but some analysts expected a downturn in economic activity due to weaker industrial activity in Romania and weaker demand from its main trading partners.

“Romanian industry confirmed its weakest quarter since mid-2015: +1.2 percent in 1Q 2019 versus 1Q 2018. The data, however, has been strongly influenced by the wildly swinging numbers from the energy & gas sector which, in March alone, contracted by 8.1 percent compared to March 2018,” ING Bank analysts said in a research note.

In 2018, Romania’s GDP recorded a growth of 4.1 percent in real terms, up to RON 944.2 billion (EUR 202.9 billion), according to INS revised data.

During the last few years, the government adopted a strategy of wage-led growth, stimulating household consumption and GDP growth rates, but this model has generated larger fiscal and current account deficits.

Last year, Romania’s current account balance of payment registered a deficit of EUR 9.42 billion – or 4.7 percent of GDP -, up 58 percent against 2017.

In its February 2019 Inflation Report, Romania’s central bank expects the C/A deterioration to continue in 2019 and its financing structure to remain “problematic”.

Romania is still the second-poorest EU country if we look at the more relevant GDP/capita index, with around EUR 10,400 per inhabitant in 2018.

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