During January-September 2006, Romania's economy grew by 7.8% y/y in real terms, amounting to RON 229.6bln (some EUR 65bln). In the third quarter of 2006, Gross Domestic Product reached RON 92.7bln (near EUR 26.2bln), rising by 8.3% y/y, according to the preliminary readings of National Statistics Institute. The Gross Value Added of Romania#s economy totaled RON 201.5bln in the first three quarters of 2006, advancing by 7.8% y/y in real terms, while the value of indirect net taxes of subsidies increased by 7.2% y/y to reach RON 28.1bln. The fast dynamics of both components arose from the expansion in the volume of activity, determined by fast increases in labour productivity, as Romania underwent important structural changes stirred by EU accession as by January 2007.

On the production side, the agriculture was the only sector of economy which continues to disappoint, despite mild weather, and this reveals important structural deficiencies. In the first three quarters, agriculture grew by a modest 3.5% y/y against the 12.6% y/y decline in Q1-Q3 2005, when it was seriously affected by floods. Although agriculture performed poorly in 2006 as well, it increased its contribution to the formation of value added in economy from 5.3% in Q2 to 13.3% in Q3. This is far from being good news considering our weather-based agriculture, as the GDP extends its exposure to conjuncture factors.
Constructions remained by far the best performing sector of our economy, as they grew by 19.2% y/y during July-September, with an overall growth of 17.7% y/y since the beginning of the year. The impressive dynamics of this sector was determined by the reconstruction works following last year's massive floods and by the preparations to comply with EU standards. Also, the double digit salary growths and fast dynamics of mortgage loans stirred the appetite of constructors to develop large residential projects.
The service sector maintains strong, as it fastened its growing pace to 8.5% y/y in Q3 from 7.5% in Q2 2006, however it diminished its weight in the gross value added formation in favour of agriculture and constructions.
The industrial sector rebounded in 2006, as a consequence to sustained investments in the second semester 2005, rising by 7.1% y/y during January-September, while in the third quarter of 2006 the industrial activity grew by 8% y/y in real terms.

On the expenditures side, the household's consumption maintains its buoyant rhythm started in 2004, posting a 12% y/y increase since the beginning of 2006, as it is fueled by fast rising salaries and consumer loans. The National Bank tried to contain the sharp expansion of consumer lending, however the results were rather limited due to the high demand in the market and harsh competition in retail banking. NBR's main accomplishment consisted in switching the credit demand of individuals from forex to RON denominated credits and therefore they managed to increase the efficiency of the monetary policy. Public consumption recorded modest increases during January- September, advancing by 2.6% y/y, although the fiscal deficit is targeted to reach 2.5% of GDP in 2006. The sharp rise in household incomes boosted consumption and investments, but the internal supply was unable to satisfy them and determined the widening of net exports shortfall.