Romania’s GDP increased by 4.4% y/y in Q3 2018, speeding from 4.1% y/y in the previous quarter, according to the statistical office’s second revision of national accounts data. Growth was revised from 4.3% y/y, first released on Dec 7. Calendar- and seasonally-adjusted annual growth was also revised upwards, to 4.2% y/y from 4.1% y/y. The quarterly growth remained the sale, at 1.9% q/q. Hence, Romania’s nominal GDP was RON 265.6bn (EUR 57.2bn) in Q3, revised up from RON 263.7bn
Looking at detailed supply figures in Q3, the upward revision was backed by stronger activity growth in retail, cultural and professional activities compared to the previous estimation. Thus, those fields added a 0.1pp contribution each to the GDP rise in Q3. On the demand side, revisions were more significant, with final consumption’s contribution revised upwards by 0.4pps, mainly over a higher contribution of collective consumption of government. Household’s consumption contribution was also revised upwards, but at a slighter rate. Downgrades were in inventory and net exports’ contributions. Thus, inventory change contributed by 0.2pps less than initially estimated, which means that inventory increased at a weaker pace, signalling that economic mood is less optimistic than previously thought. Net export’s negative contribution to economic growth in Q3 was stronger by 0.1pps, because export growth was overestimated in the December release.
Overall, the state’s statistical office revised up its GDP development figures in Q3, which indicated that economic growth accelerated again, supported by household consumption. However, economic growth deceleration is significant when compared to 2017 and make the government’s expectations regarding economic growth in 2018 highly unlikely. The authorities expect GDP to grow by 4.5% in 2018, which means that economy should rise by at least 5.0% y/y in Q4. Final consumption would remain the major growth driver in Q4, in our view, and it would very probably pick up, as recent retail trade prints revealed. Industry also started to revive in October and November, and would probably improve contribution to growth. Nevertheless, construction, investment and net export kept on deteriorating and might offset industry’s improvement and consumption’s robust growth, we think. Thus, we do not believe that GDP growth would jump above 5% in Q4.