Romania’s GDP rose by 4.3% y/y in Q3, the statistics office reported in its flash estimate on November 14. The economic growth marginally gained momentum from 4.0% y/y in Q1 and 4.1% y/y in Q2.

The Q3 growth is close to the most optimistic independent projections, but not supportive of the government’s full-year 4.5% overall growth forecast.

The seasonally-adjusted GDP advanced by 1.9% q/q in Q3 after the 1.5% q/q increase in Q2. Romania’s economy thus returned to growth rates in line with the robust performances in past years (6.9% y/y in 2017) after the hiatus undergone in 4Q17-1Q18. Further advances at similar high rates face, however, significant obstacles such as the tight labour market and insufficient investments but partly offset by the supportive monetary policy. Eventually, the continuation of the positive trend among major European economies remains the key driver in the medium term.

The detailed breakdown by formation and utilisation elements was not revealed. Inventory build-up contributed significantly to the GDP during the first two quarters of the year, raising question marks in regard to the sustainability of the overall growth rates as the inventory cycle enters the downward stage.

The European Commission projected 3.6% y/y GDP growth for Romania in its Autumn Forecast on November 8. For such a pessimistic projection, growth should ease to 2.6% y/y in Q4.

The state forecasting body projected 4.5% y/y full year growth in its own Autumn Forecast. Such an optimistic scenario would be possible only if GDP accelerates to 5.4% y/y in the final quarter of the year.