The economic growth in Romania eased from 6.4% YoY in Q1 and 5.1% YoY in Q2 but remained unexpectedly robust at +4.0% YoY in Q3, according to flash estimates of the statistics office INS.

For the year-to-date period, the GDP growth rate was +5.0% YoY, which remains slightly above consensus expectations.

"The figures are still relatively good, but the deceleration will likely continue. Probably consumption was again the engine of economic growth. As the data from retail sales show, it went well," explains Ionuţ Dumitru, chief economist of Raiffeisen Bank, quoted by Ziarul Financiar.

"Consumption continued. The sector of service has also performed well," says Adrian Codirlaşu, president of CFA Romania, adding that on the supply side, the sector of constructions has resumed growth in the non-residential and infrastructure area, and an increase in investments is also visible. 

Quarterly data was significantly revised - but this is not unexpected given the altered seasonality over the past couple of years (the period to set the seasonality pattern). Thus, the seasonally adjusted remained positive at +1.3% QoQ in Q3, at the same level as in Q2 and not far from the +1.5% QoQ in Q1.

Notably, the rolling two-year period used to estimate the seasonality no longer includes the "Covid quarter" (Q2, 2020) – which has severely altered the seasonality as estimated by INS. The seasonality may have changed compared to the pre-Covid period, particularly because of the high energy prices prevailing now, but not as much as estimated by INS's model that included the Covid quarter until recently. 

INS should have perhaps suspended (since the emergence of the Covid-19 crisis) for a period of time the dynamic adjustment of the seasonal pattern based on a two-year period of time and/or should have used a longer-term pattern instead in order to provide seasonally-adjusted figures with decent relevance. 

Notably, the YoY growth rates for Q1 and Q2 were not revised - meaning that only the seasonality pattern assumed by the model changed. This means that the possible adjustments to the full-year forecast have nothing to do with the seasonal revision/pattern - but with other factors - external or internal.

Indeed, the BCR financial group downgraded FY 2022 GDP growth estimate to 4.7% YoY from 6.2% (visibly overly optimistic) previously. "Based on the new historical data set for Romania's GDP and incorporating new GDP growth forecast for the Eurozone for 2023 (-0.1% Bloomberg consensus vs +0.9% ECB September forecast), we revised 2023 GDP growth projection for Romania to 2.1% from 2.7% previously," according to the note sent to investors by BCR Research.

iulian@romania-insider.com

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