Romania Q2 GDP Growth Confirmed at 4.1 Percent

Romania’s gross domestic product rose by 4.1% in the second quarter of this year compared with the same period from 2017, to RON 218.8 billion ($54.71 billion), according to national institute of statistics data released on Friday.

The report confirms previously released estimate showing Romania’s GDP grew by 4.1% year-on-year and by 1.4% quarter-to-quarter in Q2 2018, Business Review reported.

Romania’s economy rose by 4% year-on-year in the first half of this year, according to INS. Last year, Romania posted a GDP growth rate of 6.9%, the highest in Europe.

The growth rate recorded in 2017 is also the highest since 2008 in Romania and is due mainly to government-led increase in households’ consumption.

But Romania’s economy showed the first signs of slowdown in the first quarter of this year, as GDP remained almost flat compared with the fourth quarter of 2017, the second weakest performance among the EU states, as consumer spending loses steam and the government has lower fiscal space to nourish its wage-led growth model.

INS data show that household final consumption expenditure rose by 5.5% in H1 compared to H1 2017, easing from 10.2% in 2017.

During the last few years, the government adopted a strategy of wage-led growth, stimulating household consumption and GDP growth rates, but this model has generated larger fiscal and current account deficits.

Many economists insist Romania should change the economic model in order to obtain real long-term economic and social development.

The GDP growth rate recorded in H1 was mainly due to the increase in agricultural production, with 6.9% compared to H1 2017, in information and communications sector (+5.3%), in professional, scientific and technical activities (+4.6%) and in wholesale and retail, repair of vehicles, transport, storage hotels and restaurants (+3.8%).

Construction was the only sector in Romania which declined in H1 by 0.4% compared to the H1 2017.

Romania is still the second-poorest EU country with €9,600 per capita in 2017.