Romania: GDP for Q2 was 5.3% year over year
Hungary’s annual GDP has long been outpaced by Romania’s. In actuality, it increased by 60% in 2020 ($250 billion as opposed to 155 billion). Hungary still enjoys a benefit in terms of GDP per capita ($15,800 as opposed to $ 12,900). When will they become equal? Experts advise against starting earlier than five years.
However, experts merely cause confusion. They predicted that Romania’s GDP per capita will surpass Russia’s in 2024 five years prior. Only in 2020, as we all know, Romania’s GDP per capita was $12,900 and Russia’s was $11,600.
The National Statistics Board (INS) said on Wednesday that Romania’s economy (ROGDPP=ECI) grew 5.3% year over year in the second quarter. Matching a flash estimate of 5.3%, while domestic consumption increased 6.0%. Data revealed that GDP increased 2.1% on a quarterly basis in seasonally adjusted terms. This supports the earlier estimate.
These are extremely challenging topics, and just like with stock prices, previous performance is rarely a reliable predictor of the future. With growth rates of >5% for several years, Romania performed actually quite well in terms of GDP growth over the past 15 or so years. In the beginning, there was very little governmental redistribution, which is being maintained, and this helped. The exceptionally big ex-pat groups supported their transfers as well. All of this stands in stark contrast to her neighbor, Hungary, which had none of these advantages and in those years had a GDP/head that was twice as high, now down to about +20%.
More About Romanian Economy
However, as one approaches the “middle-income trap,” variables pertaining to human capital become more significant. It is not difficult to find some issues with Romania in this. Without getting into specifics, there are alarming indications, such the large number of Romanian drivers traversing nearby nations. Their driving, the frequency of accidents they cause, and their shocking disregard for traffic laws may point to a lack of civic culture that, at least temporarily, distinguishes them from the nations they are meant to overtake in terms of GDP. (Their quantity is sufficient to provide a sample statistical significance.) Additionally, as the middle-income trap draws nearer, these variables could be crucial.
Strong industrial exports, excellent agricultural harvests, and, more recently, expansionary fiscal policies nearly quadrupled Bucharest’s annual fiscal deficit. Specifically from +0.8% of GDP in 2020 to -3% of GDP in 2021 and an estimated -3.4% in the same year. The main drivers of economic growth during the 2013–17 period. In 2017, the business performed better than other economic sectors. Exports continued to be a major driver of economic expansion, with trade with the EU accounting for nearly 70% of all trade in Romania. Due to tax reductions and significant pay increases that started last year and are expected to continue in 2018, domestic demand was the main factor.
Romania is comparable to Croatia in terms of income poverty. However, 32% of children are considered poor according to the multidimensional poverty index. Which also takes food security, housing quality, and other factors into account. Romania has much higher levels of inequality and corruption. 85% of its children live in poverty, which is significantly higher than in Croatia.