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Key changes in GDP formation structure: Trade surpasses industry. GDP advance on Q1 – maintained at 2.4%, gross

de Marin Pana , 13.7.2020

The National Institute of Statistics confirmed the economic growth of 2.4% in gross series and 2.7% in seasonally adjusted series for the first quarter of the current year compared to the same period of the previous year. The nominal value obtained was very slightly revised downwards, from RON 216.26 billion to RON 215.97 billion, namely a minus of about RON 300 million.

The proportion from the adjustment of the nominal results also applied for the transformation into seasonally adjusted values ​​(from RON 272.42 billion to RON 272.07 billion, so that growth values ​​mentioned maintained, as well as the (surprising) advance of 0.3% compared to the fourth quarter of the previous year. We note that the adjustment is necessary for comparability because, usually, Q1 contributes not by a quarter but a fifth to the annual result.

This is how growth data for the Romanian economy updated in the provisional version 2 after the first quarter of 2020 look, with the observation that, again, there were quite a few resettlements between the quarters presented in the current release, compared to previously published values:

*

  • Evolution of gross quarterly GDP compared to the same period of the previous year (% seasonally adjusted series)
  • Quarter
  • Evolution of quarterly GDP compared to the previous quarter (% seasonally adjusted series)
  • Quarter

*

It should be noted that in recent years, the highest performance has been achieved, even without a crisis of such magnitude as the one induced by the pandemic, in the first quarter of the year. Then, results adjusted and reported as such to Eurostat are generally on a decreasing trend but the reference to gross values reported before the adjustment seems to be better as a guide for the final result. The exception from Q4 2019 shows that we were caught in an unfavourable moment when we were trying to get out of the slowdown trend in the economy.

Essential changes in GDP formation structure

Regarding the GDP formation, a major change in the growth structure is taking shape. Trade gained the first position, replacing the industry, which is visibly slowing in terms of volume, with -5.9% in Q1 2020, on a surprisingly high price index (+7.3) and with a negative contribution of 1.2 points percentages to GDP advance.

It should be noted that Covid crisis, the effect of which was felt only in the last two weeks of the first quarter of the year, just sharpened a pre-existing decline, which led to the unprecedented situation since the last crisis, of having a smaller result even in nominal terms compared to the same quarter of the previous year (from RON 42.58 billion to RON 42.11 billion).

Unfortunately, we should point out a field that, although it was not directly affected (as in the previous crisis) did not contribute, according to the statistical calculations, to the economic advance, that is the financial intermediation and insurance segment. With a volume of activity at -1.3% and a price index of 8.6, the highest level in the economy, it is still good that its influence was zero on economic growth.

Trade increased its share of GDP to 20.8% (in the provisional version 1 it was even 21%) but its contribution to the economic result was one percentage point, compared to 1.4 pp. in the same quarter of the year. last. All in all, it is good that we have demand but if we do not support it with domestic production, we only slow down the economic advance and create imbalances on the deficit side.

*

  • GDP – gross series – by categories of resources in Q1 2020 and their effect
  • Evolution                     Effect
  • Sector             Result              Volume            Price                GDP
  • (Billion RON)
  • Manufacturing
  • Trade, transport, auto repairs, hotels, etc.
  • Public administration, education, health, etc.
  • Real estate transactions
  • Professional activities, support activities, etc.
  • IT&C
  • Constructions
  • Entertainment, home repairs, other services
  • Financial intermediations and insurance
  • Agriculture, forestry, fishery
  • Gross added value
  • Net taxes on product
  • GDP

*

The relatively good result and the overall rescue of the economic performance came from three directions: constructions (+ 23.3% in volume, exceptional performance favoured by the base effect), information and communications (+ 14.2%) and professional activities, support services, etc. (+ 10.5%). These double-digit growth segments have cumulated, as an impact on GDP, the whole economic growth in Q1 2020.

A special mention is worth to be included for constructions. The price index of only 0.3, found more vaguely in the index of 2.0 from real estate transactions (and, without further comments, absent in the sales), in fact, the ONLY ONE that pulled prices in the economy down to the deflator of only 4.0 and allowed, implicitly, the achievement of + 2.4% for GDP performance. Only that, beware, just by base effect, this feat cannot be repeated next year.

A substantial adjustment of stocks

In terms of GDP use, the increase in the final consumption of households was the main economic growth driver, with two and a half percentage points of the result of 2.4%. The gross fixed capital formation had a positive evolution (more than doubled at the revision of primary data), significantly increasing (+ 13.1%), with a positive influence of +2 pp.

*

  • Contribution of categories of use to gross domestic product formation and growth on Q1 2020 – gross series
  • Final consumption
  • – individual final consumption of households
  • – final consumption of households
  • – non-profit institutions serving households
  • – individual final government consumption
  • – collective final government consumption
  • Gross fixed capital formation
  • Stock variation
  • Net exports of goods and services
  • Export of goods and services
  • Import of goods and services
  • GDP

*

We should note the decrease in the volume of individual final government consumption, of -4.9% (in principle, a praiseworthy evolution), given that results in current prices have evolved from RON 13.76 billion in Q1 2019 to RON 17.61 billion in Q1 2020, the price index being 5.5 (the effect on GDP was -0.4 pp.)

It is possible that there is a matter of statistical classification because there is a growth rate by 13% occurred in the final collective consumption of the public administration (natural in the pandemic), but a nominal increase from RON 24.67 billion to only RON 26.11 billion, in the context of prices increasing by 5.6%.

Finally, the influence of stock variation shifted from + 2pp. in the provisional version 1 to -0.9 pp. in provisional version 2, to accommodate the changes in the government expenditure and, in particular, on the foreign exchange side, where the influence of net exports was reset from -3.2 pp. to -2.2 pp. (the influence of exports from -2.8 to only -0.6 and that of imports from 0.4 pp. to 1.6 pp.).

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Publicat la data de 13.7.2020

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