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”New heights of progress and civilization”: official GDP growth – 8.8%. Consequences

de Marin Pana , 20.11.2017

The signal forecast that the National Institute of Statistics announced indicates a record growth rate of 8.8% in the third quarter of 2017 on the gross series and 8.6% on the seasonally adjusted series.

The GDP result in 2017 before the last quarter of the year rose to 7% on the gross series and to 6.9% on the seasonally adjusted series.

In addition, quarterly data have been recalculated upwards for the first and second quarter of this year, from 1.8% and 1.7% respectively, to the 2% threshold.

Compared to which, a new increase of 2.6% appeared in Q3. In short, according to the official data, we saw the highest economic growth since 1989, which leaves China behind, as well as other countries (see table).

*

  • Quarterly GDP evolution compared to the previous quarter (% seasonally adjusted series)
  • Quarter

*

If compared to the same quarter of the previous year, we can see that the economic advance (even seasonally adjusted, for the comparability, including with the EU countries) kept speeding up, as seen in the column of quarters from the INS release. Where the third quarter of 2017 has even doubled over the same period in 2016!

*

  • Quarterly GDP evolution compared to the same quarter of the previous year (% seasonally adjusted series)
  • Quarter

*

These are the official data offered as a signal and around the National Day the so-called signal 2 data will be issued, then the semi-definitive ones and only in 2019 the definitive value calculated for the current year will be set in stone. But two key observations can be made.

Spectacular growth without investment and development

1.First, it is interesting how nobody has realized that we got as far as to our neighbour Bulgaria in our process of harvesting these economic results (there was a joke regarding the reports on the results in the socialism period, which people from older generations know very well) and the population did not feel such an extremely exceptional result, hardly repeatable at the historic scale (if ever!).

  1. The second, the scepticism of the National Commission of Prognosis seems strange, what it recently announced, in the autumn forecast used to substantiate the 2018 budget, a result of only 6.1% of the economic growth for the current year. A simple math equation, at the middle school level, which implies that the fourth quarter has a share in the 2017 GDP equal to a third (the usual one, in fact), directs us to a level of only 4.5% for the economic growth at the end of the year.

A value that would be as honourable as possible, if not equivalent to a sudden deceleration since the speed of the economy would decrease sharply (according to the official data) to about half, from one quarter to the next. That is below the 5% level recorded in the fourth quarter of 2016.

Otherwise, even so, the massive economic growth without investments will become a prestigious Romanian brand, registered as such in the economy treatises.

Finally, it should be noted the negative base effect of the ultra-positive economic growth reported for 2017:

The bigger the economic growth this year, the harder it will be to reach a robust additional growth in 2018, not easier. But let’s wait for the official statistics, which will surely stupefy all international institutions.

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