Gross Domestic Product (GDP) in the third quarter of 2024 stagnated compared to the previous quarter, on a seasonally adjusted basis. GDP decreased by 0.2% against the same quarter in 2023, according to data issued on Thursday by the National Institute of Statistics (NIS).
GDP recorded an advance of 0.8% in the first nine months of 2024 compared to last year’s same period.
The NIS also revised the Q2 2024 advance, with GDP growth estimated at 0.8% against Q2 2023, compared to the previous 0.9% growth (seasonally adjusted series).
In the press release explaining the recent monetary policy decision, National Bank of Romania (NBR) management noted that „the latest data and analyses indicate somewhat more modest quarterly growth of economy in H2 of 2024 than initially forecast, but in gradual acceleration, implying an increase in the annual dynamics of GDP in the third quarter, given the conditions of divergent developments at the level of aggregate demand components and major sectors”.
High frequency data and industry developments point to a continuation of the trend
High-frequency data points to an anemic economic development at the start of the fourth quarter as well. In October 2024, the BCR PMI® index for the manufacturing industry in Romania was 48.1, up from 47.3 in September. This value indicates a contraction of the sector. However, the increase compared to the previous month suggests a slowing of the pace of deterioration.
The main challenge was the decline in new orders, influenced by reduced demand and difficult economic conditions. As for production, it continued to fall, but at a slower pace than in the previous month. Employment rate fell for the fifth month in a row, albeit marginally. Inflationary pressures went up, reflecting higher costs for producers.
„October brought the fourth consecutive reading of the BCR PMI index on the manufacturing industry in Romania below the threshold of 50, which indicates a contraction compared to the previous month. The value was 48.1, higher than the 47.3 of the previous month”, commented BCR chief economist Ciprian Dascălu.
1-2% of GDP growth forecasts for 2024
The International Monetary Fund (IMF) sees an advance of only 1.9% of GDP for Romania’s economy in 2024, a significantly more pessimistic forecast than the one in spring, when international experts anticipated an economic growth of 2.8% of GDP, according to the World Economic Outlook report.
At the end of September, the European Bank for Reconstruction and Development (EBRD) in turn worsened the estimates regarding the evolution of Romanian economy in 2024, against the background of the drop in external demand affecting industry, but also the IT sector. According to the latest EBRD forecasts, Romania’s GDP would register an advance of 1.4% this year, down from the estimate of 3.2% presented in May.
Rating agency Moody’s also revised down the economic growth forecast for Romania, from 2.8% to 2% in 2024.
ING revised the economic growth forecast for Romania this year, from 2% of GDP to 1.3%.
Erste economists decided to modify their forecast as well, from 2.6% to 1.9% of GDP.
With an economic growth forecast of less than 2% of GDP, Romania will have the worst performance in the region in 2025 „because it has to implement the largest fiscal adjustment package”, according to a UniCredit Bank report. On Tuesday, the National Commission for Strategy and Prognosis (NCSP) announced the growth forecast for 2024 from 3.4% of GDP to 2.8% of GDP.
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