Romania’s 0.9% economic growth in 2024 (chart) was driven by private consumption, seen in the higher value added generated by the sector of services to households (retail included), while net taxes also contributed significantly, particularly in the second half of the year.

The construction sector lost momentum in Q4 (-5.3% y/y) dragged down by the 12% y/y plunge in gross fixed capital formation in Q4, according to detailed data published by the statistics office INS.

On the GDP formation side, the main contribution was made by net taxes on product (the difference between taxes on product due such as VAT, excise duties, other taxes and product subsidies), which grew by 0.7 percentage points (pp), equal to the overall GDP growth (0.7% y/y) in the quarter. This was also the case in Q3, when the contribution from net taxes was 1.6pp and the GDP advanced by 1.2% y/y.

In the whole year, final consumption increased by 4.0% y/y in 2024 (+5.4% y/y for private consumption), while gross capital formation contracted by 1.7% y/y. The cycle of building up inventory contributed to the 2.2% y/y advance of gross capital formation.

For 2025, the government expects the roles of consumption versus capital formation to change: consumption is projected to grow by only 2.1% while gross capital formation would surge by 5.9% y/y (+7.0% y/y in 2026 when the Resilience Facility funds should be fully used).

On the GDP formation side, the value added generated by agriculture plunged by 10.5% y/y in 2024, creating low base effects for a significant contribution in 2025 (assuming no particularly adverse weather). 

Industry ended flat (+0% y/y) in 2024, thanks to a 1% y/y increase in Q4. The government expects slight (+0.5% y/y) advance in 2025 and stronger growth rates in the coming years. 

The construction sector ended the year with a disappointing 2.4% y/y decline in terms of value added, but this was partly due to the double-digit (+12%) growth rate in 2023 (negative base effects). Robust growth rates of 4.8% this year and higher in the coming years are expected by the government.

Services to households generated 2.1% y/y more value added in 2024, while the IT sector lost momentum and advanced by only 0.3% y/y in terms of value added last year.