Romania: Economy expands on the back of surging exports
June 8, 2011
In the first quarter, GDP rose 1.7% over the same period last year according to revised data from 8 June, which was broadly in line with the flash estimate released on 13 May (+1.6% year-on-year). The figure contrasted the 0.6% drop in the fourth quarter and marked the first positive annual reading since Q1 2009. The first quarter reading was mainly driven by an improvement in the external sector, as domestic demand remains depressed. Private consumption dropped 1.7% over the same period last year (Q4 2010: -1.7% yoy), and government expenditure plummeted 14.0% (Q4 2010: -4.5% yoy). However, gross fixed investment contracted a softer 2.2%, compared to the 4.7% fall in Q4 2010. The contribution from the external sector to overall economic growth improved, as exports of goods and services expanded 23.6% in the first quarter (Q4 2010: +17.1% yoy), while imports rose 15.4% (Q4 2010: +12.2% yoy). At the sector level, the first quarter reading reflected strong growth in the industrial sector, which expanded 10.1% over the same period last year, while on the other hand, both agriculture and services contracted. A quarter-on-quarter comparison corroborates the improvement shown in annual figures, as GDP expanded 0.7% in seasonally adjusted terms in the first quarter, on top of a 0.1% expansion tallied in Q4 2010, thus technically exiting a two-year recession. The government expects the economy to return to positive growth this year and expand 1.5% before accelerating to 4.4% in 2012.