The economy grew by 2.1 percent last year after the statistics office revised its calculations from the 2 percent growth the INS initially reported, according to data released Friday.

Most sectors of the economy contributed to GDP growth in 2023 compared to 2022, with the following sectors contributing positively:

• Agriculture, forestry and fisheries (+0.4%) with a weight of 3.9% in the formation of GDP, the volume of which increased by 10.2%;

• Construction (+0.8%) with a weight of 8.1% in the formation of GDP, the volume of which increased by 11.0%;

• Wholesale and retail trade; repair of motor vehicles and motorcycles; transport and storage; hotels and restaurants (+0.2%), with a weight of 20.5% in the formation of GDP and the volume of which increased by 0.8%;

• information and communication (+0.4%), with a weight of 7.1% in the formation of GDP and the scope of which increased by 5.1%;

• Real estate operations (+0.1%) with a weight of 7.3% in the formation of GDP, the volume of which increased by 1.6%;

• Professional, scientific and technical activities; provision of administrative services and provision of auxiliary services (+0.3%) with a weight of 8.2% in the formation of GDP, the scope of which increased by 3.6%;

• Public administration and defense; social insurance from the state system; education; health care and social assistance (+0.1%), with a share in GDP formation of 11.9% and the scope of which increased by 0.9%;

• Performing, cultural and recreational activities; repair of household products and other services (+0.1%) with a weight of 2.8% in the formation of GDP and the volume of activity of which increased by 5.1%.

• Industry had a negative contribution to the change in GDP (-0.5%), as a result of a 2.3% decrease in the volume of its activity.

In terms of GDP usage, the increase was mainly due to:

• Expenditures on final consumption by households, the volume of which increased by 2.9%, contributing to GDP growth +1.8%;

• Expenditures on individual final consumption of state administrations, the volume of which increased by 2.8%, contributing +0.2 to GDP growth;

• Effective aggregate final consumption of state administrations, the volume of which increased by 2.9%, contributed +0.3% to GDP growth;

• Gross accumulation of fixed capital (investments), the volume of which increased by 12.0%, contribution to GDP growth +2.9%.

• Both the export of goods and services and the import of goods and services had a negative contribution to the change in GDP (-0.9%), due to a decrease in their volume by 2.1% and 1.8%, respectively.

How GDP was obtained as a measure of the economy

GDP, like many other economic innovations, was developed during the Great Depression to give American policymakers a more complete picture of an economy deeply affected by the crisis. What we call GDP today was first calculated in 1934 by economist Simon Kuznets, who later won the Nobel Prize for his efforts.

The first reports of Kuznets were called “Accounts of national income and product” and provided data related to national income and national production.

By the end of World War II, Kuznets’s GDP calculations had become the leading economic indicator for the developed countries of the world, and remain so to this day.

How is GDP calculated?

Like other countries, Romania publishes quarterly, semiannual and annual GDP reports. They highlight GDP growth rates, which tell us how much the economy has grown from one quarter to the next.

GDP is also seasonally adjusted, which takes into account the impact of seasonal influences on the economy.

For example, consumers buy more toys and gadgets in November and December in the run-up to Christmas, and many workers go on vacation in July/August, making “summer” GDP look weaker than “winter.”

GDP is measured in real terms, meaning it is adjusted for inflation. Without this adjustment, we would be looking at nominal GDP, which does not accurately reflect the growth of the economy

What is the difference between GNI and GDP?

Difference between Gross National Income (GNI) and Gross Domestic Product (GDP) – Both measures the amount of goods and services sold to the final consumer in an economy, but the former refers to the income earned by national individuals or companies, while the latter, much more commonly used, for income received on the national territory.

GNI can be higher than GDP, usually in the case of countries that have companies that have invested in profitable operations carried out abroad, but even lower than GDP when part of the domestic output belongs to foreign economic entities that have invested in the country . The net result equation also includes amounts remitted from the country by foreign citizens compared to those sent to the country by its own citizens working abroad. Household expenditures make up the largest share of GDP in production. Household spending, whether on a car (a durable good), a six-pack of beer, or a haircut (a service), is called consumption spending.

How does GDP help us understand the economy?

To paraphrase the words of Nobel laureate in economics Paul Samuelson, GDP is like the orbiting satellites of the economy. It summarizes large amounts of data into a few simple estimates and provides a (sensible) picture of the entire economic landscape from afar.

Looking at the different components of GDP can also help us identify which parts of the economy are strong and which are weak, and this can be useful for policymakers looking to jump-start the economy or make it healthier.

Virtually every country in the world regularly reports its GDP to the public, so a country’s GDP can be used as a measure of its economic power relative to other countries. However, national GDP figures may not be the best way to measure a country’s relative economic strength because they do not take into account differences in population size.

For example, China has the second largest economy in the world, larger than the economies of Germany, Italy, Russia and Brazil combined. But because it has 1.3 billion citizens, each of them individually represents less GDP per capita than the citizens of any of these other countries. GDP per capita can often help us understand differences in living standards between countries.

What are the disadvantages and limitations of GDP?

GDP is a very useful tool and Simon Kuznets certainly deserves a Nobel Prize for his work. However, GDP is not the last word for modern economists and politicians.

Calculating the size of an economy is a complex activity, and no one has been able to calculate it in a timely and strictly accurate manner. Thus, each GDP release is subject to multiple revisions that take months to arrive at a final result. Quarterly GDP data can undergo major changes from the first estimates to the latest revisions.

These fairly frequent inconsistencies often lead to skepticism about the NIS, especially from those who believe that the numbers can be manipulated for political advantage. But such inconsistencies are inevitable when Statistics has incomplete data in the initial stages and fills in the gaps later.

GDP is important, but sometimes poorly calculated

GDP has many limitations, but there is currently no better measurement. GDP can be used to analyze the progress of an economy, to compare several economies over time, or to help us understand what “drives” our economy.

In recent years, a number of alternatives have been developed that claim to express national success better than GDP. Some economists focus on gross national product or gross national income. Others single out more esoteric indicators, such as sustainable progress, national happiness, or open government, as ways to measure the strength of many countries around the world. However, many of these indicators rely on GDP as a starting point without condemning it entirely.

GDP is the starting point from which anyone can begin to understand the economy. It is not the last word on the country’s economy (and never was), but without it it would be much more difficult to understand how the interrelationship of the internal segments of the economy pushes or slows down the country’s progress.

We define the economy by GDP. Today, despite the warnings of its inventor, GDP has become the standard by which a country’s well-being is measured, writes former Financial Times journalist David Pilling in his book Growth, an Illusion. If the economy is growing, then everything should be fine. If the economy is shrinking, the situation is not so good. But this mirror, which we can’t take our eyes off, is more suitable for the bathroom than the bathroom. The image it portrays is highly distorted and increasingly alien to reality. Our economic mirror is broken.