Romania’s statistics office INS revised slightly upward, from 4.3% to 4.4%, the annual GDP growth for the third quarter of 2018, keeping unchanged the estimates for the first two quarters (4.0% and 4.1%).

Higher value added in the services sector (for households and firms as well) and imports slightly stronger than initially estimated, were balanced by larger advance of the public consumption (+3.8% revised from +1.5%).

But the general picture remained the same: the variation of inventory contributed 3.1 percentage points (indeed revised downward from 3.3 percentage points) to the overall 4.4% annual GDP growth in Q3. The contribution eased from 3.7 percentage points in Q2 but remains high for the third quarter in a row heralding that the inventory cycle will soon make a negative contribution (even if of a smaller magnitude) most likely during 2019.

If there is something notable in the revision published by the statistics office on January 11, it is the upward revision of the GDP annual deflator: to 7% revised from 6.3%. For January-September period, the deflator was revised from 6.2% to 6.5%. Might not be totally relevant but a detail still rises some question marks: the industrial price inflation was less than 5% in January-September and less than 6% in Q3 while the consumer price inflation has been even lower.

Higher GDP deflator results in larger nominal GDP hence lower key ratios such as budget deficit ratio, current account to GDP ratio or public debt to GDP ratio. Marginal revisions such as from 6.2% to 5.5% for January-September GDP deflator results in downward revision of budget deficit to GDP ratio of 0.1 percentage point, which is a small amount yet critical in terms of meeting the budget deficit target.

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editor@romania-insider.com

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