Detailed data confirms private consumption supported Romania's 5% GDP growth in Q1

Romania’s statistics office INS on June 6 confirmed the country’s GDP increased by 5% year-on-year in the first quarter of the year (Q1) and detailed the GDP utilization and production breakdown.

The detailed data confirmed that private consumption had a key role in the economic growth: the households’ final consumption expenditure rose by 6.7% year-on-year, the highest annual growth rate in five quarters, and contributed 4.3 percentage points (pp) to the GDP growth in Q1.

On the upside, the gross fix capital formation moved in the positive growth area with a 5.4% annual advance and a small 0.9pp contribution. However, this was all the positive side of the detailed Q1 GDP figures released by INS.

The net imports accounted for more than 4% of GDP for the second month in a row, a high level not seen since 2012. Notably, Romania’s National Bank (BNR) has just named earlier this month the widening external deficits as the main risk to financial stability.

Also on the utilization side, the accumulation of inventory continued: 3.9% of GDP was used for this end. The accumulation of inventory thus contributed 2.4pp to the GDP growth, more than twice the contribution of the gross fix capital formation.

On the formation side, the value added generated by the sector services to households rose by 10.8% year-on-year contributing 1.3pp to the GDP growth. The total gross value added generated by the economy increased by 4.4%; therefore, the services to households contributed roughly one third. The net taxes surprisingly contributed 1.1pp to the GDP growth, thanks to outstanding 10.4% advance in volume terms.

Elsewhere in the real sector, the value added generated by industry rose by 0.8% year-on-year and contributed only 0.2pp to the GDP growth. The constructions sector, albeit not particularly important in Q1, contributed 0.2pp as well thanks to a robust 6.5% rise in the value added generated (the activity gained momentum in the residential sector particularly).

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