Economy grinds to a halt in Q3

Flat reading underwhelms markets: According to a preliminary estimate, GDP stagnated on a seasonally adjusted quarter-on-quarter basis in the third quarter (Q2: 0.1% qoq s.a.), surprising markets on the downside. On an annual basis, the economy expanded 1.1% in Q3 (Q2: +0.9% yoy).

Downbeat domestic demand likely weighed on result: While the release did not provide a complete breakdown, high-frequency data suggests that private consumption decelerated in sequential terms in Q3; retail sales growth lost momentum in the third quarter compared to the previous quarter. On the production side, industrial output contracted at a steeper quarterly pace in Q3, likely dragged on by drought and protracted weakness in German manufacturing. A complete breakdown will be released on 6 December.

Growth to return but remain underwhelming: Though our panelists forecast the economy to return to growth in Q4, economic growth is set to remain downbeat in 2024 as a whole—weighed down by a poor performance in H1 and sluggish demand in the EU—and post the worst result since 2014, barring 2020’s pandemic-induced downturn. Moreover, our panelists expect growth to pick up but remain below its pre-pandemic 10-year average in 2025 due to weaker private consumption growth and spillovers from persistent weakness in the German economy—Romania’s main trading partner.

Panelist insight: Commenting on the reading, Vlad Ionita, analyst at Erste Bank, stated: “In light of the recent data, and assuming no significant revisions, we are lowering our full-year economic growth forecast to 0.8%, down from our previous estimate of 1.9%. We maintain our 2025 growth forecast at 2.8%, although risks lean to the downside, depending on fiscal measures likely to be introduced at the start of 2025.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Romanian government consumption projections for the next ten years from a panel of 13 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable government consumption forecast available for Romanian government consumption.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Romanian government consumption projections.

Want to get access to the full dataset of Romanian government consumption forecasts? Send an email to info@focus-economics.com.