Economy up 6% in 2007, above expectations

Economic growth stood at 6% in 2007, exceeding the expectations of analysts, who had forecast a 5.7% rate. This occurred after figures surpassed the performance recorded in the first nine months of the year (5.8%), however, the results failed to meet the official target of 6.1%, the National Statistics Institute (INS) announced yesterday. The economy registered a rapid 6.6% growth rate in the fourth quarter (Q4), the highest level posted last year.
In 2007, GDP amounted to 121.3 billion euros, against 97.2 billion euros in 2006. Therefore, in just one year the economy grew by over 24 billion euros. In addition, GDP per inhabitant stood at 5,720 euros last year.
In a ZF poll, conducted last week among 16 analysts, results reveal that initial expectations pointed to economic growth standing at 5.7%, both for Q4, and 2007 as a whole. Although the economy performed better than the average forecasts, some analysts nearly managed to match the estimates published by INS. Constantin Chirca, deputy manager of the National Bank’s statistics division, originally placed economic growth at 5.9%-6% for 2007, and at 6.1%-6.2% for Q4. Lucian Anghel, the BCR’s (Romanian Commercial Bank) chief economist, estimated economic growth at 5.7%-6% in 2007
“Considering these figures, the GDP growth rate in 2008 should be even higher than in 2007,” said Lucian Anghel, one of the 16 analysts who made more upbeat estimates.
Although the INS has yet to publish the performances of the separate economic components, the higher-than-expected growth in Q4 more than likely came from the service sector (on the supply side), and from investments (on the expenditures side), according to Ion Ghizdeanu, president of the National Prognosis Commission (CNP).
“Services fared better in the last quarter of the year. We might see higher-than-expected increases for the travel and trade sectors, but also a slower-than-expected decline in agriculture. Accelerated growth in the last quarter was almost certainly prompted by investments, whose growth rate increased from 25% after nine months, to 29% for the entire year,” Ghizdeanu told ZF.