Romania’s economy slows down to 0.3% QoQ growth in Q3

The economic growth (gross terms) eased to 7.2% YoY in the third quarter of the year (Q3) from 13.9% YoY in Q2, while the average annual growth rate for the entire January-September period was 7.1% YoY, the statistics office INS announced in a flash estimate.

Already in its fifth quarter of recovery after the lockdown quarter last year, Romania’s economy exceeded its pre-crisis peak (reached in Q1, 2020) in Q2 this year, and it further advanced in Q3 - yet slowing down, as some industries (automobile production, oil refining) were hit and the whole economy came under the pressure of the rising energy prices.

Further growth, broadly seen as 4%-5% per annum in the coming years, remains for the next quarters subject to various risks ranging from more Covid-19 waves (at home and in Europe), high interest rates, high energy prices, political uncertainty (hence fiscal uncertainty) and sluggish recovery of the global production chains.

The state strategy and forecasting body CNSP revised downward the projection for this year’s GDP from 4.9% to 4.6% to incorporate the negative effects of the risks that have already materialised (energy prices, interest rates).

The main growth driver, expected to boost the country’s GDP over the coming years, is the Recovery and Resilience Plan - but, despite a front payment expected this year (EUR 3.6 bln), more clarity is still needed in regard to the specific projects included and schedule for completion next year.

From a broader perspective, the economic growth remains weak in the post-lockdown period and particularly eased in Q3.

Compared to the same period in 2019 and expressed in annualised terms, Romania’s economic growth eased to 0.6% in Q3, down from 1.2% in Q2.

The statistics office INS estimates the quarterly growth rate in Q3 at 0.3% QoQ,visibly down from 1.5% QoQ (revised from +1.9%) in Q2 and 2.2% QoQ (revised from 2.6%) in Q1.

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