IT&C and industry brought Romania’s GDP close to pre-crisis level in Q1

Romania’s statistics office INS confirmed the Q1 GDP flash estimate, showing a marginal (0.2%) annual decline in real terms and robust 2.8% quarterly advance in seasonally adjusted, real terms.

In absolute terms, Romania’s GDP was RON 223.5 bln (EUR 45.8 bln) in the second quarter of the year.

On the formation side, the moderate increase of the industry (including utilities 18.8% of GDP) and the sharp expansion of the IT&C sector (8.8% of GDP) offset the steep contraction seen in the services sectors. The industry contributed 0.4pp to the overall GDP annual dynamics (-0.2% yoy), while the sector of IT&C contributed 0.8pp.

The sector of B2b services (6.6% of GDP) contracted by some 10% yoy in GVA terms resulting in a negative 0.7pp contribution to the overall GDP annual dynamics. The companies in the sector of services to households (only 2.8% in GDP) generated 16% smaller value-added, resulting in a negative 0.5pp contribution to GDP’s annual dynamics.

Notably, the contribution of the net taxes was negative (-0.2pp) against adverse expectations generated by the deferred tax payments reported by the Government.

On the utilisation side, there are two key visible features: firstly, the gross fix capital formation surged by nearly 10% yoy, the equivalent of a 1.7pp contribution to the GDP’s annual dynamics.

Domestic consumption also edged up, by 1.3% yoy, resulting in a 1.1pp contribution. Unfortunately, a more significant part of the domestic demand (compared to Q1 last year) was supplied from foreign resources. The net imports accounted for 6.8% of GDP, meaning they accounted for some 6.35% of the domestic demand in Q1 this year.

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