GDP data for Q3 – much better than expected

The real GDP fell by -0.7% from the second quarter based on seasonally adjusted data. The contraction pace eased from the previous quarter when it stood at -1.1% qoq.

We have expected to see a flat quarterly growth rate in Q4 2009. However, today's data suggest that the chances for a positive quarterly growth rate in the last quarter of this year have increased. There are increasing chances to enter on an upward trend of GDP already in the last quarter of 2009 (positive quarterly growth in Q4 compared with Q3), although the annual growth rate would remain in the negative territory until second half of 2010. The GDP growth for 2009 could be close to -7%, better than our expectation (-7.5%) and much better that the IMF expectation (-8.5%).

We expect the economic recovery to come through the external channel (higher exports driven mainly by the recovery of eurozone economy, with positive effects on industrial output in Romania), as there are low chances to see a strong recovery of domestic demand in the next quarters.