Domestic consumption takes over as GDP growth engine for Romania, industry still the largest contributing sector

Romania’s 3.8 percent GDP growth in the first quarter of 2014 compared to the same period the previous year, was mainly supported by domestic consumption, which added 4.6 percent to GDP growth. The net contribution from exports was just 0.7 percent, while investment (gross fixed capital formation) continued to be a drag on growth with a 1.3 percent negative impact, according to the first provisional data released by the National Statistics Institute (INS) on June 4, 2014. The data shows significant changes compared to last year, when Romania’s economic growth was based mainly on exports. Of the 3.5 percent GDP increase in 2013, 4.4 percent came from exports and just 0.6 percent came from consumption, with investment and changes in inventories on the minus 1.5 percent. This change was anticipated mainly by good retail sales figures in the first quarter. From the production approach, industry continues to be the largest contributor to economic growth, with some 2.3 percent of the total 3.8 percent in the first quarter. Industry also has the largest contribution to GDP formation, with almost 30 percent. Trade (both retail and wholesale) was also among the higher contributing sectors, with 0.6 percent. Its weight in the GDP is 12.5 percent. According to INS, all sectors of the economy contributed to the GDP growth in the first quarter, compared to the same period on 2013, except some areas such as constructions, financial intermediation activities and insurances, and professional, scientific and technical services, which showed small declines. Net taxes on products also added 0.8 percent to GDP growth. Total nominal GDP in the first quarter was some EUR 28.4 billion, INS provisional data shows. Romania’s year-on-year GDP rise in second half of 2013, best in Europe. Irina Popescu, irina.popescu@romania-insider.com Andrei Chirileasa, andrei@romania-insider.com