According to the latest data, the annual economic growth rate moderated from 5% in the first quarter of 2019 to 4.4% in the second quarter, the lowest level since the fourth quarter of 2018. Also, the quarterly increase shrank from 1.2% in the first quarter to 1% in the second quarter, the weakest evolution since the first quarter of 2018.
Radulescu explained the evolution of the local economy by a reduction of the activity in industry and of consumption.
Thus, retail sales volume (proxy variable for private consumption, the main GDP component) decreased from 8.5% year-over-year in the first quarter to 5.4% year-over-year in the second quarter (the lowest level since the third quarter of 2018), despite a high growth rate of the real household disposable income and reduced real financial costs.
Also, the industrial production fell 1.7% year-over-year in the second quarter of 2019, the weakest evolution since 2009, amid global commercial tensions and a significant deterioration of the macroeconomic climate in the eurozone (Romania’s main economic partner).
The constructions sector, however, accelerated from 11.7% year-over-year in the first quarter of 2019 to 31.3% year-over-year in the second quarter of 2019.
In the first six months of 2019, Romania’s GDP grew 4.7% compared with the first half of 2018.
Private consumption continued to be bolstered by a positive climate on the workforce market and the lending market (including a reduced level of real financing costs) in the first half of 2019. Public consumption grew in the first half of 2019, in the context of fiscal-budgetary policies and lax revenues.
Romania’s trade balance deficit widened in January-June 2019 due to global commercial tensions and a deterioration of the local economic competitiveness (in the context of a lax, pro-cyclic and unsustainable mix of economic policies).
Consequently, Banca Transilvania expects Romania’s economy to grow at annual average rates of 3.8% in 2019, 3.3% in 2020 and 3.7% in 2021, respectively.