Larger imports than exports and consumption-driven GDP growth in Q1 2007

The Gross Domestic Product (GDP) over January-March reached a nominal value of 10.7 bln lei and a growth rate of 7.3%, in real terms, compared with the first quarter of 2006. According to the Ministry of Economy and Trade, the GDP growth is driven by consumption, which is generally determined by the inflows of foreign currency from the residence and by the transfers made by the non-residents from abroad. The Ministry says that the investments also played a considerable role in fostering the growth. The investments in fixed capital in the first quarter rose by 38.4%, up to 4.2 bln lei. Imports in January-March 2007 exceeded exports 2.7 times. Exports during January-June 2007 increased by 27.6%, while imports by 38% compared with the corresponding period last year. Consequently, the negative balance of trade rose by 45% and over 1 bln USD. The industrial sector saw an insignificant growth. The industrial output in January-July 2007 increased by 0.5% in comparable prices on January-July 2006 and reached a nominal value of 13.9 bln lei. The incomes to the national public budget totalled 11.7 bln lei in January-July 2007 or by 26.6% more on January-July 2006. The expenditure was 11.8 bln lei or by 28.5% higher. The expenses from the state budget made up 41.5% of the public expenditure, from the territorial-administrative units – 25.5%, from the state social insurance budget – 24.4% and from the obligatory health insurance funds – 8.6%. The largest part of the expenses, 64%, went to implement social programs in education, healthcare, social assistance, culture, arts and sport; 15.6% was used in the national economy; 7.4% in defence, maintenance of public order and national security; 5.2% on general state services. The rate of inflation in July 2007 was 1.1% on June 2007 and 5% on December 2006, a 2 p.p. decrease compared with the same period last year.