The economy has grown by 6.9% in the first quarter of this year, witnessing the fastest pace in the last seven years.
This increase was fuelled by consumption (up 10%) and strong business in the construction sector (up 20%). These two segments successfully offset the poorer results of industrial output (up 4.8%) and the decline in agriculture.
“Normally, this year”s growth cannot go below 6-6.5%,” Ion Ghizdeanu, chairman of the National Prognosis Commission, which had estimated first-quarter economic growth to stand at 6.5-7% a month ago, told ZIARUL FINANCIAR. He says that, over the last 6 or 7 years, the economy has gathered speed during the year, which means the annual rate of growth has always exceeded the rate of growth posted in the first quarter, except last year. “If we don”t get six waves of floods again this year, we will be revising upwards the growth forecast for 2006 this autumn, from the level of 6% as it stands at present,” Ghizdeanu added. Growth in the first quarter last year stood at 5.9%, and then 2005 ended with a 4.1% growth.
The 6.9% growth of the economy in the first three months was primarily due to the construction sector, which witnessed the highest increase of all the Gross Domestic Product (GDP) components, specifically 20.4% compared with the first three months in 2005, according to information presented by the National Statistics Institute (INS). This sector, however, accounts for quite a small share of the GDP, only 4%, but has been constantly increasing over the last few years. As in GDP”s case, the construction sector witnessed a record pace in the first three months of this year.
“Construction has become the drive behind economic growth,” commented Vergil Voineagu, INS chairman. The construction market last year went up by 9.9%, so that the 20.4% increase in the first three months of the year means the pace has doubled.
On the other hand, industry lagged behind the average economy pace, increasing by only 4.8% and reaching a 26.6% share in the GDP. Industry grew by only 2.5% last year, and its share in the economy stood at a little more than 24%.
“Industry should make a greater contribution to the GDP formation, but developments in this sector are unsatisfactory at the moment,” Voineagu says, explaining that managers of companies in the industrial sector are complaining about a low volume of orders, which are only enough for the short term. The industry went through a forced restructuring process last year, caused by the appreciation of the RON, the rise in utility and fuel prices, and the competition from foreign products. Services increased by 6.8% in the first quarter, to a share of almost 54% in the domestic economy, mainly driven forward by trade, transport and financial-banking services, the INS chairman specified. The only decline in the quarter came from the agricultural sector, which fell 5.3%, though its small share in the overall economy (merely 2.7% during this period) did not drag the economic growth figure down.