At the same time, the Gross Domestic Product (GDP) went up by 0.1 per cent in the last quarter of 2010 compared to the previous quarter. ‘According to the first estimations, the GDP in Q4 of 2010 was in real terms bigger by 0.1 per cent than in Q3 the same year (seasonally adjusted data). On a year-on-year basis, in Q4 the GDP decreased by 0.6 per cent – gross series and by 0.5 per cent – seasonally adjusted series,’ the INS release states. ‘The contraction rate significantly dropped and a positive growth was only hindered by the VAT hike,’ Laurian Lungu, Macroanalitica managing partner explained for HotNews.ro.

Apart from that, the trend suggesting a slight recovery was visible in macroeconomists’ calculations as early as Q2 of 2010. ‘Figures are above expectations. Q4 brought a robust economic upturn and we hope the trend will return to growth from now on,’ Ionut Dumitru, chief-economist of Raiffeisen Bank and president of the Fiscal Council told HotNews.

Although the news coming from the INS looks good, it does by no means indicate that the distance separating us from the other European economies has become any shorter. Let us not forget that Romania is still in a negative territory (annualized data), while other economies have walked across the zero growth threshold which makes the distance that separates us from them even bigger. There are still areas requiring interventions, such as productivity, labour and tax evasion.

The Eurostat report shows Romania has the smallest economic growth in the EU in Q4 compared to Q3 last year, while the UK, Portugal and Greece recorded GDP contractions. Its modest 0.1 per cent growth similar to Italy’s places Romania on the last place among states with a positive GDP performance in Q4. The biggest growth was registered by Bulgaria and Lithuania (1.7 per cent each). On a year-on-year basis, Romania and Greece are the only countries where the GDP decreased in the analysed period, with the only difference that the Greek economy suffered a steepest contraction by 6.6 per cent. The EU GDP grew by 2.1 per cent in Q4 on a year-on-year basis and by 0.2 per cent on a month-on-previous-month basis. Euro zone posts year-on-year GDP growth by 2 per cent and month-on-previous-month growth by 0.3 per cent.

The economic growth estimated for 2011 in Romania, of 1.5 per cent, is still insufficient for the creation of new jobs. Only economic growth rates higher than 2 per cent can generate additional labour force absorption, HotNews notes. Even if Romania is out of the period of economic instability, social recovery can only be expected when we have a more robust economic growth. The head of the IMF review mission in Romania, Jeffrey Franks, was stating in November that, although the upturn was set to begin in Q4 of 2010, the economy would still close the year on 2 per cent decrease and would grow by 1.5 per cent in 2011.