Romania's GDP increased by a real 5.6% in the third quarter of the year (Q3), compared to Q2, in seasonally adjusted terms, the statistics office INS announced, confirming the flash estimate issued in November. The quarter's GDP reached RON 270.2 billion (EUR 57.3 bln).

In gross terms, Romania's economic output in Q3 was 6.0% lower than in the same period of 2019.

The partial economic recovery in Q3, after the deep 12.2% quarter-on-quarter contraction in Q2, came short of the analysts' expectations.

A significant part of the 6% annual contraction, namely 2.7 pp, is explained by the outstanding plunge in agriculture where the value-added generated was 29% lower in a quarter when this sector usually holds significant weight in the total GDP. Meanwhile, the industry contracted by only 6.6% year-on-year, resulting in a 1.5 pp negative contribution to the quarter's economic decline.

The sector of services to households, which aggregates the HoReCa segment's negative dynamics and the retail segment's positive evolution, was down 3.2% year-on-year in terms of gross value added and dragged down the GDP by 0.5 pp.

The third major negative driver for Romania's GDP in Q3 was the net taxes and subsidies, which contracted by 12.6% year-on-year making a negative 1.2 pp contribution.

Only the sectors of constructions (+9.8% yoy), IT&C (+6.5% yoy), and real estate (+1.2% yoy) recorded positive dynamics in the third quarter of the year.

On the demand side, domestic consumption dropped only by 3.3% yoy in Q3 while the gross fixed capital formation advanced by 2.3%. The domestic demand thus demonstrated milder yoy deterioration compared to the domestic supply - but the external demand plunge was steeper.

andrei@romania-insider.com

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