Romania's preliminary data on 4Q12 real GDP confirms our view regarding the key contribution of household consumption to economic growth. Real GDP increased 0.1% q/q (s.a. data) and 0.3% y/y in 4Q12, while full-year economic growth stood at 0.3%. Early implementation of severe austerity measures in the summer of 2010 created fiscal space for increases in public wages in 2012 and Romania had one of the best performances in terms of economic growth in the EU in 4Q12.

 Household consumption went up 0.4% q/q in 4Q12 and its growth would have probably been higher in the absence of inflationary pressures.

Gross fixed capital formation in Romania contracted 3.6% q/q in 4Q12, due to lower public investments in infrastructure after the EUs decision to temporarily suspend some operational programs. The situation changed in February, when the EC decided to resume payments for the HR Development Program after an audit mission, and other programs focusing on infrastructure funding could be unlocked in the coming months. Exports managed to grow 0.4%, while imports fell 2.7% q/q in 4Q12.