According to the first detailed release on the Romanian GDP for Q4 2023 and 2023 overall, the country’s GDP recorded a 0.5% QoQ decline, a 1.1% increase in Q4 2023. Furthermore, the country’s GDP grew by 2.1% YoY. This would mean that the Romanian GDP amounted to RON 415.9bn during Q4 2023, while during 2023, it amounted to RON 1.59tn.
Starting off with the quarterly data first, Romanian GDP amounted to RON 415.9bn during Q4 2023, which in real terms, represented a decline of 0.5% QoQ, but an increase of 1.1% YoY. Turning our attention to the FY data, Romanian GDP amounted to RON 1.59tn, growing by 2.1% YoY in real terms.
Seasonally adjusted quarterly YoY GDP development (Q1 1996 – Q4 2023, %)
Source: Romanian National Institute of Statistics, InterCapital Research
Breaking down the drivers of this growth, Agriculture, forestry and fishing, which hold 3.9% of the GDP, contributed 0.4 p.p. to the growth, as the activity volume increased by 10.2% YoY in this segment. Construction, with a share in GDP of 8.1%, contributed 0.8 p.p., as the volume of activity grew by 11% YoY. Wholesale and retail; motor vehicles and motorcycles repair; transport and storage; hotels and restaurants, with a 20.5% share of GDP, contributed 0.2 p.p. growth, as the volume activity increased by 0.8%.
Information and communication, with a 7.1% share in GDP, contributed 0.4 p.p. growth, as activity volume increased by 5.1%. Real estate activities, with 7.3% of GDP, contributed 0.1 p.p. to GDP growth, as the sector’s volume activity increased by 1.6%. Professional, scientific and technical activities; activities of administrative services and support activities, with an 11.9% share in GDP, contributed a 0.1 p.p. increase to the GDP, as the volume activity here grew by 0.9%.
Public administration and defence; social insurance of public sector; education; health and social assistance, with an 11.9% share in GDP, contributed 0.1 p.p. to the overall GDP growth, as the volume activity of the sector grew by 0.9%. Shows, culture, and recreational activities; repair of household goods and other services, with a 2.8% share in GDP, increased by 0.1 p.p., with a 5.1% volume activity growth.
On the other hand, Minning and quarrying; manufacturing; electricity, gas, steam and air conditioning production and supply; water supply; sewerage, waste management and decontamination activities recorded a negative 0.5 p.p. contribution, because of the activity volume which decreased by 2.3%. Finally, a positive contribution of 0.2 p.p. was also recorded from net taxes on products, which recorded volume growth of 3% YoY.
Overall, we can see that there has been a widespread expansion of the Romanian GDP across most of the sectors, excluding, roughly speaking, Energy and related services. This was to be expected, as energy was the main driver of inflation in 2022 and for a part of 2023, and as it makes up such a large share of the Romanian GDP when prices came down, so did the slowdown in the GDP. This happened even in real terms, as the companies in these sectors produce a lot, employ a lot of people, and create further added value for the economy.
GDP change contribution by expenditures (Q4 2023, entire 2023, YoY, p.p.)
| wdt_ID | Category | Q4 YoY contribution (p.p.) | 2023 YoY contribution (p.p.) |
|---|---|---|---|
| 1 | Total final consumption | 1.4 | 2.3 |
| 2 | Actual individual consumption of households | 1.7 | 2.0 |
| 3 | Final consumption expenditure of households | 2.0 | 1.8 |
| 4 | Final consumption expenditure of NPISH | 0.0 | 0.0 |
| 5 | Individual final consumption expenditure of General government | -0.3 | 0.2 |
| 6 | Collective final consumption expenditure of General government | -0.3 | 0.3 |
| 7 | Gross fixed capital formation | 3.0 | 2.9 |
| 8 | Change in inventories | 0.7 | -3.1 |
| 9 | Net export | -2.1 | 0.0 |
| 10 | Export of goods and services | -1.7 | -0.9 |
| 11 | Import of goods and services | 0.4 | -0.9 |
Source: Romanian National Institute of Statistics, InterCapital Research
Meanwhile, in terms of the usual GDP growth breakdown, the final consumption of households was by far the largest driver of growth, with a 1.8 p.p. contribution to the overall 2.1% growth YoY, as the volume in this category grew by 2.9%. Individual final consumption expenditure of the General Government recorded a 2.8% volume increase, contributing 0.2 p.p. to the GDP growth rate. A similar situation is present with the Collective final consumption expenditure of the General government, which with a 2.9% volume growth contributed 0.3 p.p. to the GDP growth rate. Furthermore, Gross fixed capital formation, whose volume increased by 12% YoY, contributed 2.9 p.p. to the GDP growth rate.
On the other hand, both exports and imports of goods and services negatively contributed to the change in GDP (-0.9 p.p.), as their volume decreased by 2.1% and 1.8% YoY, respectively.
For this breakdown, several things can be pointed out. Firstly, the fact that household consumption is the main driver of growth in the economy is a positive sign, as this is usually how it is for developed economies. Furthermore, this type of growth is more stable, than say depending on commodity exports, or debt-driven growth in real estate or any similar sector. A higher level of General government spending, while not usually something that should be too large, is in the current unstable situation required. Furthermore, gross fixed capital formation, further supported by various EU funds, is also a good sign of economic development and convergence with the EU. Lastly, the drop in exports and imports was to be expected; imports due to inflation, especially of energy and commodity prices, and exports for similar reasons, although from the perspective of countries that are importing goods and services from Romania. After all, in the current environment of still elevated interest rates, a slowdown in economic activity, and above-average inflation rates across Europe, slowly expanding is still a positive development.
