Romania: GDP declines at a slower pace in Q1
June 8, 2021
A second release confirmed that GDP dropped at a more moderate pace of 0.2% year-on-year in the first quarter, following the 1.4% contraction recorded in the fourth quarter of last year. Q1's reading marked the best result since Q1 2020.
The print reflected a broad-based improvement. Private consumption rebounded in Q1, growing 0.8% year-on-year and contrasting the 6.2% contraction recorded in Q4 2020. Moreover, fixed investment growth accelerated to 9.9% in Q1 from 6.5% in the previous quarter, while public spending expanded 2.9% (Q4 2020: +1.9% yoy).
On the external front, exports of goods and services rebounded in the first quarter, growing 0.9% year-on-year and contrasting Q4 2020’s 1.8% decline. In addition, growth in imports of goods and services picked up to 4.9% in Q1 (Q4 2020: +2.3% yoy), marking the best reading since Q4 2019.
On a seasonally-adjusted quarter-on-quarter basis, economic growth slowed notably to 2.8% in Q1 from 4.6% in the previous period.
Commenting on the outlook, analysts at the EIU noted:
“Despite high coronavirus infection and death rates relative to its EU peers for much of 2020, Romania avoided implementing a stringent national lockdown during the second and third waves of the pandemic. That made for a shallow recession by EU standards and has paved the way for a return to pre-pandemic levels of activity in many sectors. […] We expect full-year growth of 4.8% in 2021 on the back of a rebound in domestic and foreign demand.”
Ciprian Dascalu and Eugen Sinca, analysts at Erste Bank, added:
“We revised our economic growth forecast for 2021 to +6.7% from +4.2% after big positive surprises in 4Q20, with its subsequent carry over effect, and 1Q21. Real incomes are expected to barely grow this year, with the labour market yet to fully adjust to the permanent changes in the consumer behaviour. Pent-up household demand and state investments should be the main growth drivers this year.”
Author: Alexandros Petropoulos,