Commerce and IT&C take over as the main economic growth engines in Romania

Commerce and the IT&C sector contributed the most to Romania’s economic growth while the industry’s contribution went down significantly in the second quarter of 2015. Romania’s gross domestic product (GDP) increased by 3.3% (in gross terms) in the second quarter of 2015 compared to the same period of 2014, according to data released by the National Statistics Institute (INS). Commerce and tourism activities have contributed with 1 percentage point to the GDP growth in the second quarter and had a 17.9% weight in the total GDP. The information technology and communications sector, which has a significantly lower share in the economy (7.4% in Q2), also contributed 1 percentage point to the GDP growth, due to a 15% increase in its activity volume, INS data shows. These two sectors have taken over as the main economic growth engines in Romania starting last year, replacing the export-driven industry, which only added 0.2 percentage points to the GDP increase in the second quarter. The growth in commerce has been supported by higher domestic consumption. The Government has stimulated internal demand by reducing the VAT rate on food from 24% to 9%, starting June 1 this year. The VAT rate on other products will also be cut from 24% to 20% starting January 1, 2016, according to the new Fiscal Code. The IT&C sector has been boosted by the numerous foreign investments in IT research and support centers in Romania. Many foreign companies have opened such centers in Bucharest, Cluj-Napoca, Timisoara, Iasi, and in smaller cities, in the past years, and these investments have started to yield results. The IT&C sector’s contribution to the GDP was 7.4% in the second quarter of 2015, up from 3.8% in the same period of 2013, and 4.9% in the second quarter of last year. The IT&C sector thus contributed more to the economy than the construction and financial services sectors combined. Constructions had a 4% contribution to the GDP and added 0.1 percentage points to the GDP growth while financial services contributed 3.1% to the GDP and had no addition to the economic increase in Q2. Industry remained the biggest contributor to the GDP in the second quarter, with a 22.8% share, but only added 0.2 pp to the GDP growth. The real estate transaction sector had a similar contribution to the GDP increase, as did the public administration sector. The net taxes on products also generated 0.5 pp of the economic growth. Romania’s economy up 3.7% in the first half Romania’s retail trade sees largest growth in the EU Erste Group warns of economy overheating risks in Romania Romania’s economy is flying high