The Romanian official statistics body (INS) has revised upward the value of the gross domestic product (GDP) of the country in 2018 to RON 944.2 billion (EUR 202.9 billion).
On March 3, INS said that Romania’s GDP was RON 940.5 billion (EUR 202 billion) last year – significantly below the government’s last forecast of RON 949.6 billion.
The value is the largest ever recorded in the country and exceeds for the first time in decades the GDP of Portugal (EUR 201.6 billion), according to Eurostat data.
However, Romania’s economy remains smaller than the economy of the Czech Republic (EUR 206.8 billion in 2018).
Romania is now the 7th largest EU nation in terms of population but ranks 15th in terms of GDP – and 27th if we look at the more relevant GDP/capita index.
Last year, the eastern European country recorded a growth of 4.1 percent in real terms, according to INS.
Good crops helped GDP
The growth rate recorded in 2018 is much slower than the rate of 7 percent registered in 2017 and is due mainly to government-led policies to increase households’ consumption.
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.
The GDP growth rate recorded in 2018 was mainly due to the increase in agricultural production, by 10 percent compared to 2017, in information and communications sector (+7.2 percent), in in professional, scientific and technical activities (+5.7 percent) and industry (+4.1 percent).
Construction was the only sector in Romania which declined in 2018, by 5.6 percent year-on-year.
Fast catching up following the EU accession
In terms of GDP per capita in purchasing power standards (PPS), Romania posted the largest increase in 2017 among the 28 European Union member states and jumped one place in the bloc’s ranking, from the second-poorest nation to the third-poorest, with 63 percent of the EU average, according to Eurostat data.
In 2016, Romania was considered at 58 percent of the EU average in terms of GDP per capita in PPS, the second-lowest level in EU, after Bulgaria (49 percent), but below Croatia (60 percent), Latvia (65 percent), Hungary (67 percent), Greece and Poland (both 68 percent).
But after the impressive GDP growth rate recorded in 2017, Romania jumped one place in the EU nations’ ranking, overtaking Croatia.
According to Eurostat, Romania, with 63 percent of EU average, ranks above Bulgaria (49 percent) and Croatia (61 percent), and approaches Latvia and Greece (both 67 percent), Hungary (68 percent) and Poland (70 percent).
EU’s wealthiest nations are Luxembourg (253 percent of EU average in 2017), Ireland (184 percent), the Netherlands and Austria (both 128 percent).
Ireland’s GDP is artificially increased following the relocation from outside the EU to Ireland of balance sheets of large multi-national enterprises in 2015.
The purchasing power standard (PPS) is an artificial currency unit that eliminates price level differences between countries, according to Eurostat.
EU’s statistical branch explains that one PPS buys the same volume of goods and services in all countries, allowing meaningful volume comparisons of economic indicators across countries.