Romania’s GDP driven by construction and private consumption in Q4

The unexpected economic growth of 4.6% YoY in the last quarter (Q4) last year was driven by the sector of construction on the formation side, and by the private consumption on the utilisation side, according to the first set of detailed preliminary data for the quarter’s GDP released by the statistics office.

On the formation side, the 15.2% YoY advance of the value added generated by the sector of constructions contributed 1.7pp to the overall 4.6% YoY GDP growth in the quarter. The services sectors to firms and IT & Telecom contributed 0.8pp each, thanks to annual growth rates of 12.1% YoY and 15.4% YoY each.

Notably, the industry made a negative contribution (-0.9pp) given its 3.6% YoY contraction in gross value added. However, this figure overstates the industry’s actual performance since it included a comparatively (compared to Q4 in 2021) larger share of taxes collected by the government (net taxes up real 6.6% YoY with a 0.6pp contribution to the GDP growth) as an effect of the supplementary taxes collected from the energy companies and not fully returned to the manufacturing companies that generated lower value-added precisely because of the high energy prices – the cause of the extraordinary profits of the energy companies.

On the utilisation side, private consumption increased by 5.2% YoY, an outstanding performance, given the circumstances (high inflation and interest rates), contributing 3.3pp to the overall 4.6 GDP growth.

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