Bancherul - BANCI / ENGLISH / Romania: Real GDP grew by 4.4 percent yoy in Q3, much faster than expected

According to flash estimates released by the Romanian statistical office, real GDP grew by 4.4% yoy and by 1.9% qoq (seasonally adjusted) in Q3. Both growth rates were substantially above market expectations, said Raiffeisen Research.

Second estimation and details on dynamics of GDP components would be available on 6 December. Available data suggest that agriculture had a strong positive contribution both to the annual and to the quarterly GDP growth rates. But available data point also to positive contributions to the quarterly GDP growth rate from all other sectors (industry, construction, and services). On the uses side, we think that consumption, investments and net exports had all positive contributions to the quarterly GDP growth rate. The quarterly growth rates for Q1 and Q2 (initially reported as +0.5% qoq and +0.2% qoq) would most likely be revised upward.

With a substantially better than expected figure for Q3, the economic growth for 2011 as a whole should be much above our expectations of 1.5% even in case of a bad figure for Q4. Real GDP already grew by 2.7% yoy in the first three quarters. Accordingly, we think the GDP would grow by 2.5% in 2011.

Large contribution from agriculture to GDP growth in 2011 (possible up to 1 percentage point) implies risks for a negative contribution in 2012 due to the base effect. Moreover, there are clear signals of a slowdown of economic activity on the external markets which should result in a lower contribution to GDP from net exports in 2012, but also in a sluggish recovery of consumption and investments. Accordingly, the GDP growth in 2012 might come below our expectations of 1.8% (which we put under revision for a downward adjustment).