The long queues forming at the household appliance stores and the record sales logged by the big retailers operating on the Romanian market have made their way into the official statistics: public consumption surged 7.4% and fuelled economic growth in the third quarter. The risks, however, will be seen next year.
The Gross Domestic Product went up 5.5% in comparable prices in Q3 from the year-ago period, so that the nine-month GDP growth amounted to 4.7%, the National Statistics Institute (INS) said yesterday. The Gross Domestic Product had climbed 4.3% in the first half.
Public consumption, which accounts for 70% of GDP in terms of use, had not soared past the 7% level since 1995-1996 (when it climbed 13% and 8%).
As the economy had not been restructured back then, and the state capital was still predominant, that surge caused serious imbalances, which led to massive depreciation of the ROL/USD rates in 1997-1998 and soaring inflation.
Due to privatisation and foreign investment, the Romanian economy looks better now, but the risks are still lurking in the background. Especially since the industrial output has only grown 3.3% in the first nine months this year as compared to the year-ago period.
“The rapid growth pace of consumption seems to be taking us back to the past, when, instead of an increasing domestic offer, the accelerated consumption led to bigger inflationist pressures and external deficit. This suggests that, unfortunately, the Romanian economy is still too rigid to respond to market trends,” says Radu Craciun, senior analyst with ABN Amro.
The accelerated growth logged in Q3 seems to bring the Government closer to its revised growth target for 2003 – 4.8 percent.
“According to the forecasts, we may reach 4.5%-4.7% growth this year,” says Lucian Liviu Albu, head of the Prognosis Institute of the Romanian Academy.
Gross capital formation, namely investments, went up 8.8% in the third quarter, having climbed 7.9% in the first nine months.
Between 2000-2002, investments and exports were the main growth engines, whereas economic growth outpaced public consumption. This was in fact the reason why inflation could be cut down. However, 2003 is likely to mark a turning point.
“We also note the similar growths posted by the private consumption and the investments, which points to a changing structure of the growth factors, favouring consumption over investments,” Radu Craciun added.
As for the GDP formation, constructions recorded the biggest growth in Q3 – 7.7% (6.9% in the first nine months), followed, surprisingly, by agriculture with 6.9% (4.3% in the first nine months).
“The agricultural growth came as a surprise, as this summer’s official statements had pointed to a decline in this field,” Craciun added.
Moreover, services increased 5.1% (4.3 percent for the first nine months). sorin.pislaru@zf.ro