While the analysts were pleasantly surprised by the Q3 GDP reading published by the statistics office INS on November 14 (flash estimate), the statistics office’s confusing format of the GDP data release and lack of economic interpretation, along with the strictly accounting data, led to diverging interpretations and subsequently very diverse projections for the full-year result. INS reported Romania’s GDP (chain-linked quarterly series) increased by 1.2% in gross, not-adjusted terms, but decreased by 0.2% q/q in the seasonally and workday adjusted terms.
While Erste Group maintains its 1.3% projection, ING Romania maintains its 0.3% forecast that looks highly pessimistic unless a major economic collapse (-4% q/q economic contraction) takes place in the last quarter of the year – or a radical backward revision is operated by the statistics office.
Such diverging expectations are generated by the statistics office’s confusing release: it refers in the same phrase to two different quarterly GDP time series (once in gross format and once in seasonally adjusted format), implying they are the same. The seasonal adjustment comes with a workday adjustment as well, without being mentioned – but this is not as important as mixing the PYP (previous year prices) and CLV (chain-linked-volume) time series.
The CLV series indicates 0.6% y/y GDP advance in Q1 amid political uncertainty, 2.5% y/y growth in Q2 (above expectations), and a more moderate 1.2% y/y advance in Q3 under the impact of the austerity measures and subdued consumer and investor confidence. The lagged effects of the austerity measures are expected to accelerate in Q4.
Another 0.2% q/q decline would result in 1.3% GDP growth for 2025. A severe 2% q/q decline would bring the full-year growth to 0.8%.
Romania’s growth will come under the effect of two opposite drivers in 2026: the continuation of the austerity policies (frozen wages and pensions) versus the absorption of EUR 10 billion of Resilience money that would boost investments.
The general consensus is that next year’s growth will accelerate to over 1% while probably not reaching 2%.
iulian@romania-insider.com
(Photo source: Oleg Kachura/Dreamstime.com)
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