GDP growth in the first 9 months of 2022 was 5% compared to the same period last year (gross series), growth rates are lower compared to the indicators recorded in the first 9 months of 2021, so Romania’s position in the EU ranking is moving away from the peak, shows the analysis of the main Alpha Bank economist Ella Kallai.

In 2021, our country had the tenth place in terms of economic growth, and in 2022 – the twelfth.

Quarterly contribution to annual GDP growth in 9M 2022 was relatively balanced, unlike 9M 2021, when Q2 contributed the most to GDP growth, followed by Q3.

On the resources side, growth was driven by construction and services, while declines in agriculture and industry held back GDP growth. On the use side, there were also two engines supporting growth: firstly, both private and public consumption, and secondly, gross fixed capital formation.

The negative contribution of net exports to GDP growth rates for 9 months of 2022 halved compared to the same period of 2021 to -0.8 pp. from -1.9 p.p. However, the situation may change, given that the figures for 2022 are the first preliminary.

The good news that emerges from the evolution of GDP in the first 9 months of 2022 is that gross fixed capital formation (investment) accelerated in the 3rd quarter. This acceleration, along with an expansion in government consumption, offset a sharp slowdown in private consumption, whose annual growth rate fell to 3.1% in the third quarter of 2022 from 7.5% in the first half of 2022. In 2023, we can no longer expect consumption expansion given the need for fiscal consolidation, but investment may continue if European funds allocated to Romania are available. In this way, the threatened slowdown in consumption could be at least partially countered, and the slowdown in GDP growth could be more moderate.

The highest GDP growth per capita in the EU

The increase in GDP in the first nine months of this year also meant a 22% increase in GDP per capita from €8.8 thousand in the first nine months of 2021 to €10.7 thousand in the first nine months of 2022 – the highest growth in the EU . Also, the share of GDP per capita in the EU average increased from 37% to 41.5% over the same period.

However, in the EU ranking, Romania occupies the traditional second place with the lowest level after Bulgaria and before Poland.

Real convergence, which would allow to rise in the ranking of the EU in terms of GDP per capita, requires sustainable growth rates and significant investments.

From 2011 to 2021, only the Baltic States, Malta and Ireland advanced in the EU ranking for GDP per capita. Over the past ten years, GDP per capita has increased by almost 90% in the Baltic States, by 74% in Malta, and by 2.3 times in Ireland, which meant that GDP per capita in Malta grew by an average of 5.5% annually. , 6.4% in Estonia and Latvia, 6.7% in Lithuania and 8.4% in Ireland.

In Estonia, which had the same GDP per capita in 2011 as Romania in 2021, GDP per capita growth over the past decade has been driven by GDP growth at an average annual rate of 3.3% and GDP price (deflator) growth at an average annual rate of an indicator of 3.1%. In the same period, the rates of Romania were not far from the indicators of Estonia, the GDP per capita grew at an average annual rate of 6.1%, of which 3.1% was the average annual growth rate of GDP volume, 2.4% was the average annual growth rate of GDP volume. the annual growth rate of GDP prices and 0.6% was the average annual rate of population decline.

If it maintains its performance, Romania could rise in the next decade in the EU ranking for GDP per capita.

Romania’s Chance is the National Recovery and Resilience Plan and the European funds allocated to Romania for the coming years, which cannot be lost under any circumstances. The implementation of the National Recovery and Resilience Plan, which emphasizes digitalization and the transition to a “green” environment, will lead to the structural changes necessary to increase development potential and accelerate the convergence process.