The INS data confirmed the flash estimate announced in August. For the first half of the year, economic activity contracted by 0.7% y/y.
Under the Eurostat methodology, based on chain-linked volumes, GDP contracted by 1.9% y/y in Q2, after a 1.4% y/y contraction in Q1. In seasonally adjusted terms, however, GDP remained broadly unchanged in both quarters. For the first half of the year, GDP contracted by 1.6% y/y under this methodology.
The difference reflects the methodologies used to measure GDP. Under the national methodology, GDP for each respective quarter is calculated at the prices of the corresponding quarter of the previous year (PYP), allowing direct comparison between, for example, Q2 2026 and Q2 2025.
Under the Eurostat chain-linked volume methodology, GDP is expressed using average prices of the previous year as the reference for calculating volume changes. This difference in price bases can result in significantly different y/y growth rates and makes the Eurostat measure more relevant when assessing the full-year result.
Detailed Q2 GDP data confirmed expectations that construction was the only major sector to make a substantial positive contribution to economic activity in both Q1 and Q2. Construction output rose by 15.3% y/y in Q2 and 12.3% y/y in H1, contributing 0.9 percentage points (pp) and 0.7pp, respectively, to GDP growth and offsetting part of the negative contribution from industry and most services. Financial intermediation, B2B services and cultural services were among the exceptions.
Agriculture, which has limited importance for GDP during the first half of the year, also made a small positive contribution.
On the demand side, gross fixed capital formation rose by 12.7% y/y in Q2 and 10.9% y/y in H1, contrasting with a 1% y/y contraction in household consumption in both periods. Overall, domestic demand returned to positive y/y growth in Q2 after two consecutive quarters of contraction.
This nevertheless widened the net-import component to 5.6% of total domestic consumption in Q2, from 5.3% in the same period last year, after net imports had fallen below 5% of domestic demand in the previous two quarters.
Based on the preliminary Q2 data, Erste Group revised its full-year GDP projection downwards to a 0.7% contraction, from the previously forecast 0.3% contraction. The revision was preliminarily announced when INS released its flash estimate for Q2 GDP last month.
“The adjustment reflects somewhat underwhelming developments in the first half of the year,” Erste Group commented.
Erste expects consumption to remain subdued this year, as indicated by high-frequency data, with elevated inflation keeping real wage growth in negative territory throughout the year. Some partial relief may come in the second half. By contrast, investment activity should remain strong, particularly in Q3, supported by substantial EU funds available to Romania in 2026. Net exports are also expected to make a negative contribution this year.
In 2027, Erste expects economic growth to move towards its potential rate and forecasts GDP growth of 2.2%.
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