3Q11 real GDP – flash estimate: Economic growth gains speed due to a bumper agricultural crop

The breakdown of real GDP is not available yet, but we think that a double digit real growth of the agricultural output was the main driver of this strong economic growth. Households consumption probably entered positive territory supported by self-consumption and services rendered to population, while retail sales remained depressed. It is likely that gross fixed capital formation made a positive contribution to real GDP, following a recovery of investments in non-residential construction sector after a boom-bust cycle. Although loosing speed, the performance of the Romanian exports was probably not as bad as one might have expected in the context of the sovereign debt crisis in Eurozone.

We have put under revision our 2011 economic growth forecast and the new estimate will most likely stay at above 2%. In the wake of the latest Eurozone growth forecast, we will revise downwards the Romanian outlook to below 1.5% in 2012. Lower external demand, an ambitious fiscal consolidation program followed by the government and a negative base effect in agriculture will weigh on the next year's growth prospect.

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