Romania’s gross domestic product (GDP) went up by 4.4% in the third quarter of this year compared to the same period of 2015, in gross terms. The year-on-year growth rate slowed down from 6% in the second quarter, but is still one of the highest in recent years. Local analysts say the growth rate in the third quarter was below estimates.

"The growth is below expectations and it's hard to believe that the GDP will increase by 5% this year," said Ionut Dumitru, the president of the Fiscal Council, an independent think tank that evaluates the state's economic policies.

In the first nine months, the GDP increased by 4.9% compared to the same period of last year, according to data from the National Statistics Institute (INS).

In seasonally adjusted terms, Romania’s economy increased by 0.6% in the third quarter compared to the second quarter, and by 4.6% compared to the third quarter of 2015.

The data INS released on Tuesday, November 15, represents “signal” estimates and doesn’t mention the sectors that contributed most to the GDP increase. More complete data will be released at the beginning of December.

"While detailed data is due for release on 6 December, we suspect that a slowdown in private consumption and cooling down in investments due to fading effect of EU funds related projects are main factors behind the poor print," ING Bank analysts wrote in a note to the bank's clients. ING was counting on a 5.4% GDP increase in the third quarter and 5.2% for the whole year.

"Despite receiving significant boosts to disposable income from fiscal and wage policies and with likely more to come even from partial implementation of electoral promises and the upcoming fiscal easing in Jan-17 (1ppt VAT cut and elimination of special fuel excise), it could be that the consumption story is running out of steam. Still, next year should see a pick-up in investments on the back of higher absorption from the new EU budgeting programme," reads the ING note.

In the second quarter, trade, IT&C, and industry contributed most to the 6% economic growth, which was driven mainly by the higher domestic demand.

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editor@romania-insider.com