Romania’s GDP growth strengthens in Q4 2019

Romania’s GDP leaped up by 1.5% in the fourth quarter of the year (Q4) compared to Q3, in seasonally adjusted terms, posting the strongest quarterly advance in the last five quarters.

The annual real GDP advanced by 4.3% in the last quarter of last year compared to the same quarter of 2018, recovering from 3.0% year-on-year in Q3, according to the flash estimate from the statistics office INS.

The overall real growth of GDP in 2019, 4.1% surpassed the projections of international financial institutions, including the European Commission that estimated 3.9% growth for last year under the Winter 2020 Economic Forecast published on February 13.

The cause might have been the fiscal stimulus in the last two months of the year when the new Liberal Government settled all the overdue payments to the private sector pushing up the public deficit to 2% of GDP in the quarter compared to roughly 1% of GDP in the same quarter of 2018.

The sectors of constructions and retail performed well during the quarter, while industry in contrast remained in the negative area for the third consecutive quarter.

The rather gradual phasing out of the fiscal stimulus pursued by the Government is likely to maintain certain positive impact on economic growth while the unpredictable external demand is the main source for significant downward risk beside investors’ sentiment vulnerable to the political turmoil at home but to the entire emerging markets universe as well.

The EC’s forecast for 3.8% growth in 2020 followed by 3.5% in 2021 remains thus relevant, with the balance or risks skewed downwards by both external and internal factors.

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