Romania’s 0.9% GDP growth in 2024 driven by private consumption
<p>Romania’s 0.9% economic growth in 2024 was driven by private consumption, seen in the higher value-added generated by the sector of services to households (retail included), while the net taxes contributed as well significantly, particularly in the second half of the year.</p>

<p>The sector of constructions lost momentum in Q4 (-5.3% y/y) dragged down by the 12% y/y plunge in the gross fixed capital formation in Q4, according to detailed data published by the statistics office INS.</p>

<p>On the GDP formation side, the main contribution was made by the net taxes on product (the difference between taxes on product due such as VAT, excise duties, other taxes, and product subsidies): +0.7 percentage points (pp) equal to the overall GDP growth (+0.7% y/y) in the quarter. This was also the case in Q3 when the net taxes’ contribution was 1.6pp and the GDP advanced by 1.2% y/y.</p>

<p>In the whole year, the final consumption increased by 4.0% y/y in 2024 (+5.4% y/y for private consumption), while the gross capital formation contracted by 1.7% y/y. The building upon the inventory cycle contributed to a 2.2% y/y advance of gross capital formation.</p>

<p>For 2025, the government expects the roles of the consumption versus capital formation to change: the consumption is projected to grow by only 2.1% while the gross capital formation would surge by 5.9% y/y (+7.0% y/y in 2026 when the Resilience facility funds should be fully used).</p>

<p>On the GDP formation side, the value-added generated by agriculture plunged by 10.5% y/y in 2024, creating low base effects for a significant contribution in 2025 (assuming no particularly adverse weather).&nbsp;</p>

<p>The industry ended flat (+0% y/y) in 2024, thanks to a 1% y/y increase in Q4. The government expects a slight (+0.5% y/y) advance in 2025 and stronger growth rates in the coming years.&nbsp;</p>

<p>The sector of construction ended the year with a disappointing 2.4% y/y decline in terms of value added, but this was partly due to the double-digit (+12%) growth rate in 2023 (negative base effects). The government expects robust growth rates of 4.8% this year and higher in the coming years.</p>

<p>Services to households generated 2.1% y/y more value-added in 2024, while the IT sector lost momentum and advanced by only 0.3% y/y in terms of value-added last year.&nbsp;</p>

<p><em>iulian@romania-insider.com</em></p>

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