Romania’s gross domestic product (GDP) increased by 3.7% in 2015 compared to 2014, according to the first estimates released on Friday by the National Statistics Institute (INS). This is the highest growth rate for the local economy after 2008.

In the fourth quarter, Romania’s economy went up by 1.1% compared to the previous quarter (Q3 2015), and by 3.8% compared to the same period of 2014 (Q4 2014), in seasonally adjusted terms.

Last year’s GDP growth was mainly based on higher domestic consumption. The retail trade turnover went up by 8.9% in 2015. In 2014, the growth was 7%. Tax cuts and salary increases in the public sector were the main drivers to accelerate the retail sales.

This also led to higher imports and a wider trade deficit in 2014. The exports, which had been the growth engine in 2013 and 2014, decelerated from a 5.8% growth in 2014 to 4.1% in 2015. At the same time, the imports accelerated from a 5.9% increase in 2014 to 7.6% in 2015.

The local industry’s growth was also lower in 2015 compared to previous year, only 2.7%, down from 6.1% in 2014.

The construction sector also contributed to the higher economic growth in 2015. Construction work increased by 10.4% in 2015 compared to the previous year.

Romania's economy is expected to register an even higher growth rate in 2016, as new tax cuts kicked in at the beginning of this year.

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Andrei Chirileasa, andrei@romania-insider.com