Romania's GDP increased by a real 5.6% q/q in Q3, in seasonally adjusted terms, the statistics office INS announced, confirming the flash estimate issued in November. The quarter's GDP reached RON270.2bn (€57.3bn). In unadjusted terms, Romania's economic output in Q3 was 6.0% lower than in the same period of 2019.

The partial economic recovery in Q3, after the deep 12.2% q/q contraction in Q2, fell short of analysts' expectations.

A significant part of the 6% annual contraction, namely 2.7pp, is explained by the outstanding plunge in agriculture where the value-added generated was 29% lower in a quarter when this sector usually holds significant weight in the total GDP.

Meanwhile, industry contracted by only 6.6% y/y (in value added terms), resulting in a 1.5pp negative contribution to the quarter's economic decline.

The sector of services to households, which aggregates the HoReCa segment's negative dynamics and the retail segment's positive evolution, was down 3.2% y/y in terms of gross value added and dragged down the GDP by 0.5pp.

The third major negative driver for Romania's GDP in Q3 was the net taxes and subsidies, which contracted by 12.6% y/y making a negative 1.2 pp contribution. Deferred taxes and significant subsidies contributed to this.

Only the sectors of constructions (+9.8% y/y), IT&C (+6.5% y/y), and real estate (+1.2% y/y) recorded positive dynamics in the third quarter of the year.

On the demand side, domestic consumption dropped only by 3.3% y/y in Q3 while the gross fixed capital formation advanced by 2.3% y/y. The domestic demand thus demonstrated milder y/y deterioration compared to the domestic supply, but the external demand plunge was steeper.