Romanian economy up by 5.7 pct in Q1, above analysts’ estimations

The Romanian economy went up by 5.7 percent in the first quarter of the year, compared with the same period of 2016, over the estimations of analysts, according to a flash estimate of the National Institute of Statistics (INS).

In 2016, Romanian economy went up by 4.8 percent, the highest rate after 2008.

“Stronger than-expected GDP is likely to ease even more the fears about this year’s budget revenues and risks of achieving the budget deficit target of 3.0% of GDP. The GDP surprise should leave NBR doves without ammunition as the print is likely to be a surprise for the central bank as well which, according to the latest minutes, saw a ‘slowdown compared with 2016’ though ‘visibly more moderate than that highlighted in the previous projection’. Still, without any talk on policy normalisation in the minutes and a unanimous decision on keeping the corridor unchanged, a change in the policy stance in 3Q17 is unlikely. Nevertheless, this pace of growth acceleration brings both NBR rate setting meeting from 4Q17 in play for narrowing the standing facilities corridor symmetrically by 25bp despite the weakening relation between output gap and core inflation emphasized by NBR Inflation Report and minutes,” said Ciprian Dascalu, chief economist at ING Bank Romania, in a statement.

For the entire year, the Government forecasts an economic growth of 5.2 percent, while the international institutions and most of the financial analysts estimate a growth rate between 4 and 4.5 percent.

The data published on Tuesday shows an acceleration of the economic growth in the first quarter of 2017 compared with the last quarter of 2016, when the GDP increased by 4.8 percent on gross series, compared with the same period of 2015.

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On the seasonal adjusted data, the Romanian GDP climbed by 5.6 percent in the first quarter compared with the same period of 2016, after an increase by 5 percent in the last quarter of 2016, by 4.5 percent in the third quarter an by 5.7 percent in the second quarter of 2016.

In addition, Q1 2017 was the seventh quarter in row of economic growth, according to INS series.

In 2016, the agriculture registered a record of the lowest share in GDP formation, of 3.9 percent, while the industry contributed by 23.1 percent.