By Chris Ball, InvestCEE Staff
The latest statistical release from Romania's National Institute of Statistics shows that Romania’s Gross Domestic Product grew by 4.1% year-on-year, pushing Romania past Portugal to become the EU’s 15th largest economy. This comes as Q4 data comes in confirming it was 0.7% higher than Q3 according to the Romanian Statistical Office.
The sectors contributing the most to growth were industrial production, wholesale and retail, motor-vehicles and repair, transport and storage, hotels and restaurants while construction was the only drag on growth, making the government’s new minimum wage hike in that industry even more potentially harmful to overall economic development than even a normal minimum wage increase would be.
Some reports have incorrectly indicated that the driver of Romanian GDP growth was agriculture. This is a misunderstanding of the data, however. Yes, agriculture grew but it was not the driver of GDP grow. Just because something grows quickly doesn’t mean it’s important at the aggregate level. The data from Romania’s Statistical office clearly rank the drivers of growth as
Mining and quarrying; manufacturing; electricity, gas, steam and air conditioning; production and supply; water supply; sewerage, waste management and decontamination activities. This category contributed +1 of GDP’s 4.1% growth, which is 24.4% or nearly a quarter of GDP growth.
Wholesale and retail; repair of motor vehicles and motorcycles; transport and storage; hotels and restaurants which contributed + 0.7 of GDP’s 4.1% growth which is 17.1% of GDP’s growth.
Information and communication. Professional, scientific and technical activities; activities of administrative services and support services. And, finally, agriculture all tie for 3rd place in contributing nearly + 0.4 of GDP’s 4.1% or about 10%.
Romania is in good economic shape to continue long-term growth as long as new taxes and regulations don’t slow down the private economy.
To read the full Romanian National Institute of Statistics release and download the data: http://www.insse.ro/cms/en/content/gross-domestic-product-fourth-quarter-2018-provisional-data-1
About the author
Chris Ball, PhD is the co-founder and advisor for InvestCEE. Chris serves as the Honorary Hungarian Consul for Connecticut, the executive director of the Central European Institute and the István Széchenyi Chair in International Economics at Quinnipiac University. He is the founder and president of CEENET (Central and East European Network) which organizes cross border trade missions between the US and CEE since 2011 and today is a boutique consulting firm supporting Trans-Atlantic business.