Shortly after the INS released the signal GDP data for the third quarter, two major Romanian banks issued reports aimed at investors in which they noted “poor quality of GDP data” or “frequent and significant” revisions

ING: Wide divergence remains between raw and seasonally adjusted series, posing risk of significant future revisions

Today’s release of Romania’s third-quarter GDP data confirms that the economy is slowing more than expected, adding weight to our estimate of 1.5% economic growth in 2023.

Large discrepancies remain between the raw and seasonally adjusted series, creating the risk of significant revisions in the future.

Tuesday’s INS data is only an estimate, more detailed information will be provided on December 7.

Figures show the economy almost stagnated in the third quarter of this year, adding a modest 0.2% compared to the same quarter in 2022. This means that GDP growth after the three quarters of 2023 will be 1.1%, according to our estimates, 1.8%.

High-frequency indicators are already pointing to a bleak outlook for the quarter as retail sales remain weak and industrial production continues to contract. We don’t yet know whether the positive surprise from agriculture has materialized or not, but even if it did, the potential performance in agriculture would be offset by opposite performance elsewhere. Investments and net exports could make a positive contribution.

As for the data series, they continue to show marked discrepancies between the raw series and the seasonally adjusted series. The latter has undergone some significant changes. For example, in the first quarter, the dynamics were revised upwards from -1.0% to -0.7%.

In the second quarter, the evolution was revised down from 1.7% to 1.3%. We suspect that this is more due to the adjustment of the statistical model (recognized by the National Institute of Statistics) and that the series normalizes over time.

Until then, we prefer to focus on raw annual rates and are more skeptical of seasonally adjusted numbers.

This marked slowdown in growth is consistent with our long-held view that the economy will slow more than expected this year. Today’s data also confirms the latest assessment by the National Bank of Romania (BNR) of a “relatively sharp reduction in excess aggregate demand starting in the third quarter of 2023.”

BCR The quality of GDP data remains poor, to say the least, and is subject to frequent and significant revisions

Romania’s economy grew by +0.4% quarter-on-quarter and +0.2% year-on-year in the third quarter, according to GDP signal data published by the INS.

The quality of GDP data remains poor, to say the least, and is subject to frequent and significant revisions. The gap between seasonally adjusted and unadjusted data remains wide. It is difficult to find an explanation, and without detailed information we can expect significant data revisions in future releases

We maintain our full-year 2023 GDP growth forecast of +2.1% for now, pending further information, and expect the economy to grow by +3.3% next year.

There were also some revisions to historical data, but only for quarterly growth rates.

The breakdown of GDP data is scheduled to be released on December 7. On the supply side, we see a potential positive surprise from the agriculture and construction sectors (+6.3% in July-August compared to 2Q23), while industry (industrial production -0.9% q/q in 3Q23) should remain an obstacle to GDP growth.