Key Points:
Romania's economy grew by only 0.1% year-on-year in Q1/2024, while analysts' expectations were for growth of 2% in the first three months of the year and an average of 3% for the whole of 2024.
The Romanian government has a growth forecast of 3.4% in 2024.
The economic growth of only 0.1% in Q1/2024 compared to the same quarter of 2023, recorded by Statistics on Wednesday, raises question marks about the evolution of the Romanian economy throughout the year. At least 3% should be the real advance of the Romanian economy this year, according to the forecasts of local analysts, as well as international institutions.
The signal data published by the National Institute of Statistics (INS) does not come with more details about the economic growth in the first quarter, so, at least at this moment, it is not clear where the slowdown came from. Other data sets from INS show, however, that turnover in retail trade - a barometer for private consumption - grew by 6.4% in the first two months of the year. On the other hand, construction recorded a double-digit minus, and the volume of infrastructure construction, which reflects the volume of public investment, stagnated. The article doesn't explicitly state the reasons for the slowdown in Romania's economy, but it does mention a few clues: Possible reasons not mentioned in the article but to consider:
Construction: The construction sector saw a double-digit decline, which can dampen overall economic activity. Construction is a major employer and contributes significantly to GDP (Gross Domestic Product) growth. A decline suggests a decrease in investments and could be a sign of businesses being cautious.
Public Investment: The volume of infrastructure construction, which reflects public investment, stagnated. This could indicate a slowdown in government spending on infrastructure projects, which would reduce economic stimulus.
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