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.
During 2023, Nuclearelectrica recorded revenue growth of 17% YoY, an EBITDA decrease of 13%, and a net income of RON 2.48bn, a 10% decline YoY.
Starting off with the revenue, it amounted to RON 7.4bn, growing by 17% YoY. This was achieved on an electricity production of 10,294 GWh, increasing by 0.9% YoY. Of this, 4.9k GWh was sold via MACEE, (2022: 0), while 5.5k GWh was sold on the competitive market (2022: 10.5k GWh). MACEE refers to the Centralized Electricity Acquisition Mechanism, which has been effective from 1 January 2023, and will be effective until the end of March 2025. This Government Ordinance was implemented to help deal with the energy crisis after the war in Ukraine started. According to it, the Romanian Electricity and Gas Market Operator, OPCOM, buys electricity from producers at a price of RON 450/MWh and sells it to buyers at the same price.
This resulted in RON 2.2bn being sold via MACEE in 2023, and this influenced sales on the competitive market as well. As such, lower quantities were sold on the competitive market, leading to an 18% decline in revenue from the sale of energy on the competitive market, to RON 5.2bn.
Moving on, total operating expenses grew by 44% YoY to RON 5.09bn. The largest increase by far came from the tax on additional income/Contribution to the Energy Transition Fund, which grew by 142% YoY to RON 2.6bn. This is also part of the above-mentioned Government Ordinance, which while it had multiple forms before, now states (and the form active in 2023) that all the revenue achieved above the RON 450/MWh price will be taxed at a 100% rate. As Nuclearelectrica sold electricity above the price during the period, the tax / Contribution to the Energy Transition Fund grew significantly. As mentioned above, this is in effect until the end of March 2025.
Coming back to the OPEX, personnel expenses grew by 35% YoY, to RON 749m, above the inflation rate, while other op. expenses also increased, by 32% YoY to RON 661m. On the other hand, electricity purchased costs decreased significantly, by 77% YoY to RON 120m. As a result of the faster OPEX than revenue growth, EBITDA declined by 13% YoY to RON 3.1bn, implying an EBITDA margin of 42.1%, a 14.6 p.p. decline YoY.
In terms of the net financial result, it increased by 85% YoY to RON 381.6m, due to a 74% increase YoY in the financial income to RON 413.7m, while financial expenses remained roughly the same. The financial income itself, came mostly due to higher interest income (+62% YoY, to RON 352.6m), as well as higher income from FX differences (+111% YoY, to RON 42.5m).
As a result of all of these developments, Nuclearelectrica recorded a net income of RON 2.48bn, representing a decrease of 10% YoY. This would also imply a net income margin of 33.4%, which is a decline of 10.1 p.p. YoY.
Nuclearelectrica key financials (Preliminary 2023 vs. 2022, RONm)
Source: Nuclearelectrica, InterCapital Research
Taking a quick look at the balance sheet, total assets grew by 12% YoY to RON 13.2bn, supported by higher non-current assets, which grew by 24% YoY to RON 7.5bn, while current assets slightly declined. The increase in the non-current assets came from higher tangible assets (+14% YoY, to RON 6.5bn), mainly as a result of the revaluation of the lands, buildings, and constructions at FV. Furthermore, financial assets also grew significantly, by 14x YoY to RON 634.9m, mainly due to the bonds purchased by Nuclearelectrica, in the amount of RON 552.2m (2022: RON 0m).
On the other hand, total liabilities grew by 14% YoY to RON 1.4bn, supported by the 30% increase of current liabilities, to RON 1.03bn, while non-current liabilities declined by 13%, to RON 396m. The decrease in non-current liabilities came due to the loan which was being repaid reaching <1 year until full repayment, and as such its effect isn’t visible in the non-current liabilities (2023: RON 0m, 2022: RON 64.8m). On the other hand, the increase in current liabilities came primarily due to higher trade and other payables, which grew by 83% YoY to RON 816.7m.