Romania’s GDP increased by a real 6.5% in the first quarter of the year (Q1) compared to the same period of 2021 (YoY), according to the flash estimate published by the statistics office INS on May 17.

The seasonally-adjusted quarterly GDP increased by 5.2% compared to Q4 (QoQ), after the 1.0% QoQ advance posted in the last quarter of last year (revised from negative 0.1% QoQ).

INS’s flash estimate surprised the independent analysts, who were even not excluding the option of a technical recession in the first part of the year. Based on Q1 growth, the predictive model developed by BCR bank indicates an annual economic growth of 5% for the entire year, the bank’s chief economist Ciprian Dascalu said, Bursa.ro reported.

However, the multitude of one-off developments of an unusual magnitude (such as the rise of energy prices or the lockdown in 2020) decreases the confidence level provided by such models developed for smoother dynamics of the variables.

The drivers of the Q1 growth remain unclear until INS publishes the first detailed set of data for the first quarter of the year.

The significant revision of the seasonally-adjusted GDP data comes as no surprise as the seasonal pattern has been altered over the past years by one-off events of a magnitude wider than the seasonal variations. For technical reasons, the seasonally adjusted data should be regarded with caution.

But the annual growth rate (+6.5% YoY, after 2.4% YoY in Q4 last year and +5.9% YoY for the entire year 2021, remains impressive.

The record profits posted by the energy companies and the lagged effects of the high energy prices on energy consumers (residential and commercial) might explain the unexpected bullish growth in the first quarter of the year, while the lagged effects would make a negative impact later in the year. This remains just a hypothesis until detailed Q1 GDP data is released in June.

iulian@romania-insider.com

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