Romania’s 2021 GDP growth revised from 5.6% to 5.9%

Romania’s statistics office INS revised the estimate for last year’s economic growth from 5.6% under the flash report on February 15 to 5.9% under the first comprehensive estimate.

The annual growth rates have been revised upward for each of the four quarters of 2021. For the last quarter, the annual growth rate was revised, for instance, from 2.2% YoY to 2.4% YoY.

Under normal circumstances, the revision should sustain more optimistic scenarios, but the war in Ukraine and the expected turmoil on the energy markets have totally depressed the general growth outlook resulting in independent analysts halving their forecast for this year to not much over 2%.

For the whole last year, the gross value added generated by the Romanian economy increased by a real 5.6% YoY, while the net taxes strengthened by 8.2% YoY - helped by the corporate tax dues deferred from 2020 to 2021. This year, an opposite effect is likely to occur - in the sense of slower advance of the net taxes (other effects assumed constant).

Among the economic sectors, the services - trade, HoReCa - and the IT sectors helped the economy recover the most in 2021, while construction slowed down after an outstanding performance in 2020.

On the demand side, consumption advanced by 5.6% YoY last and the gross capital formation advanced even faster - by 12% YoY. Gross fixed capital formation advanced by only 4% YoY, though, amid political turmoil, meaning that the ‘capital formation’ was significantly propped up by inventory build-up.

Notably, in each of the four quarters of 2021, the net imports accounted for at least 5% of the domestic demand for consumption or investments - including the “investments” in inventory.

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