Romania: GDP records broadly stable growth in Q3
Growth strengthened in the third quarter, with GDP increasing 2.9% on an annual basis (Q2: +2.7% year on year). On a seasonally-adjusted quarter-on-quarter basis, economic growth waned markedly to 0.9% in Q3, following the previous quarter’s 1.6% growth.
Private consumption, public spending, fixed investment and exports all weakened, as did imports.
Private consumption increased 1.8% in the third quarter, which was below the second quarter’s 5.3% expansion. Public consumption dropped at the sharpest pace since Q3 2022, contracting 0.4% (Q2: +1.9% yoy). Meanwhile, fixed investment growth fell to 11.3% in Q3, marking the worst result since Q3 2022 (Q2: +13.3% yoy).
On the external sector, exports of goods and services contracted 1.6% in Q3, marking the worst reading since Q4 2020 (Q2: +0.6% yoy). In addition, imports of goods and services deteriorated, contracting 8.5% in Q3 (Q2: +0.9% yoy).
The economy should expand at a faster clip in 2024 than this year, thanks to a rebound in industrial production and stronger increases in private consumption and exports. Key factors to monitor are fiscal metrics and the renegotiation of the National Recovery Plan with the EU, while slower-than-expected progress on reforms is a downside risk.
Commenting on the outlook, ING’s Stefan Posea and Valentin Tataru stated:
“For 2024, we are likely to see a rebalancing of the growth drivers from investments towards consumption, though the former should still hold on close to double-digit growth. However, with public wages likely to stay well within double-digit growth and pensions due to be increased by 13.8% starting January 2024 and approximately 22.0% starting September 2024, the private consumption story is likely to show marked improvement.”