Romania’s GDP returns to pre-pandemic level in the first quarter of 2021. Sooner than expected, analysts say

Romania’s gross domestic product (GDP) recorded a 0.2% decline (in gross terms) in the first quarter (Q1) of 2021 compared to the same period of 2020. In seasonally adjusted terms, the GDP was unchanged versus Q1 2020, the National Statistics Institute (INS) announced on Tuesday, May 18.

However, the GDP in the first quarter of this year was 2.8% higher than in the last quarter of 2020, thus marking the third consecutive quarter of recovery after the 11.8% quarter-on-quarter drop recorded in the second quarter of 2020 amid the state of emergency and the lockdown.

The analysts see the flash report released by INS as positive and expect the economic growth for the full year to beat the previous estimates.

“There is not much to chew on in today’s data as the growth details will only be available on 8 June. Regardless of the details however, one thing is certain: as we speak, the economy is above pre-pandemic levels! This is about one quarter earlier than we had envisaged and paves the way for a GDP growth rate in 2021 that could dwarf even our optimistic 5.5% forecast,” ING Bank chief economist Valentin Tataru said in a note.

“As the retail, construction and industrial sectors have not necessarily posted impressive numbers in the first quarter, we suspect that the main growth drivers have been related to the public sector and possibly agriculture. The latter could benefit from positive base effects in 2021 after a very weak 2020. We will, however, wait for the growth details before redoing the maths and consider revising our forecast,” he added.

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