MAIN ELEMENTS OF ANALYSIS OF GROSS DOMESTIC PRODUCT DEVELOPMENT IN ROMANIA

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1 MAIN ELEMENTS OF ANALYSIS OF GROSS DOMESTIC PRODUCT DEVELOPMENT IN ROMANIA Prof. univ. dr. Constantin ANGHELACHE Bucharest University of Economic Studies, Romania / Artifex University of Bucharest Drd. Andreea Ioana MARINESCU (marinescu.andreea.ioana@gmail.com) Bucharest University of Economic Studies, Romania Drd. Doina AVRAM (doina.avram@gmail.com) Bucharest University of Economic Studies, Romania Ec. Daniel DUMITRU (dumitru.teticdaniel@gmail.com) Abstract The Gross Domestic Product has always been the most comprehensive indicator of the results achieved by a country s economy over a given period of time. In a certain period, that of the stagnated economy in 1945 (1947) and until 1989, this macroeconomic indicator was called the global social product. The social product was nothing but the gross result registered by the Romanian economy, as it is to a certain extent, with small differences, the gross domestic product. The Gross National Gross Domestic Product or Gross Domestic Product Indicator has national relevance to present the final results, with some differences depending on the concept in which these indicators are calculated. Thus, the total social product is calculated in the concept of material production in the sense that gross added value brings only the activity of material production, not other services that are not directly related to material production. Gross Domestic Product is a much more complex, more synthetic and realistic indicator of the results achieved by the economy of a country. Thus, gross domestic product is based on the fact that it aggregates any gross value added that is made in the territory of a country or by the economic agents of a country in the country and abroad in a period of time, regardless of whether it is made in the material production of goods or services. In fact, in the level of evolution of a country the weight of services is becoming more and more important because they are meant to ensure a fuller satisfaction of the needs of the country s population. And in the period when in Romania the social-economic system was super-staged, there was a system of correlative tables on the international level to ensure the comparability of the indicators, which the United Nations statistics body emphasized. In this context, the authors analyze in this article the stage where the methodology for calculating the macroeconomic indicators of results has evolved, regardless of whether it Revista Română de Statistică - Supliment nr. 6 /

2 was called total social product or gross domestic product. There are presented tables and graphs that attest the level of achievement of the successive periods Romania has also experienced in its historical socio-economic evolution. Keywords: Gross Domestic Product, Net National Product, branch, use, form of ownership JEL Classification: E01, E21 Introduction The authors propose to analyze successively the way Romania s most sophisticated indicator of gross domestic product has been achieved, the levels it has recorded. Also, for each historical period where the authors leaned and sought to draw conclusions, it also highlights the ways in which certain values of this indicator were increasing or decreasing according to the political factor, the historical factor, the participation Romania to certain activities in one part or another, in a certain area or another. Data series, suggestive charts, showing how this indicator was produced, are presented. A structural analysis of Gross Domestic Product is presented in the various periods to see the contribution of resources to the gross domestic product but also utilities in gross domestic product. Some aspects specific to one or another period are also highlighted, all having one purpose, to ensure as much as possible a unitary interpretation and analysis of the results of the Romanian economy. Emphasis was also placed on the contribution made by each branch of national economy, agriculture, industry, construction, transport, services, banking system, international trade, etc. to the formation of gross domestic product. Relevant is the gross domestic product per capita that the authors calculated and analyzed in order to give a more real dimension to the international comparability of the Romanian economy s results. Also, in many circumstances and especially in the period after 1990, it is used to calculate the gross domestic product on the basis of purchasing power parity in one year chosen as the base year, so as to highlight, reveal the real comparative stage the evolution of a country. Literature review Anghelache, Anghel, Marinescu and Dumbravă (2018) conducted a study on the evolution of the Romanian Gross Domestic Product in Anghelache (2017) conducted a broad analysis of the economic and social situation of Romania, being a reference material in macroeconomic studies. Anghelache and Anghel (2017) applied econometric models to identify the factorial influence on gross domestic product growth. Anghelache, Anghel and Stoica (2017) studied the significance of the Gross Domestic Product growth rate in Romania since Anghelache and Anghel (2017) studied the evolution of GDP using deflated 18 Romanian Statistical Review - Supplement nr. 6 / 2018

3 data. Anghelache and Anghel (2017) presented the applicability of econometric models at macroeconomic management level. Bhandari and Frankel (2015) addressed aspects of nominal nominal GDP for developing countries. A similar theme is dealt with by Garin, Lester and Sims (2016). Chamberlin (2011) studied the correlation between Gross Domestic Product, Real Income and Economic Welfare. Fleurbaey (2009) researched the possibility of identifying a social welfare measure. Macchiarelli (2013) studied elements related to GDP and inflation in the countries of the European Economic Community. Methodology, data, results and discussions Evolution of Gross Domestic Product in 2017 From the study of the data on the evolution of the Gross Domestic Product in 2017 some conclusions can be drawn. On a quarterly basis, in Q4 2017, GDP was in real terms 0.6% higher than in the third quarter of the same year. Compared to the same quarter of 2016, gross domestic product grew 6.9% on gross series and 7.0% on seasonally adjusted series; Referring to the data in Romania, the seasonally adjusted series of the quarterly Gross Domestic Product was recalculated as a result of the revised quarterly estimates for 2017, with no changes being recorded. Importantly, the evolution of Gross Domestic Product, calculated on the basis of gross series data or seasonally adjusted series quarterly, during the period , has steadily increased. The evolution of the Gross Domestic Product quarterly between 2015 and 2017, calculated as gross series and seasonally adjusted series, is presented in table no. 1. Evolution of Gross Domestic Product Quarterly Table no. 1 QI QII QIII QIV Year - in % compared to the corresponding period of the previous year- Gross series Seasonally adjusted series in% as against the previous quarter Seasonally adjusted series Revista Română de Statistică - Supliment nr. 6 /

4 From the analysis of the seasonally adjusted data on Gross Domestic Product - estimated for the fourth quarter of 2017, it was million lei current prices, increasing - in real terms - by 0.6% compared to the third quarter of 2017 and by 7, 0% compared to the fourth quarter of In Table no. 2 presents data on Gross Domestic Product calculated quarterly for Gross domestic product quarterly, seasonally adjusted series Table no. 2 QI QII QIII QIV Millions of lei, current prices In% compared to the previous quarter In% compared to the corresponding period of the previous year It is noted that from one quarter to the next, in 207 there were increases, both in absolute figures and in relative figures. In Q3, the leap was the most significant, 2.4% versus the previous quarter. Also, compared with the corresponding quarter of 2016, increases were between 5.8% in the first quarter and 8.5% in the third quarter. Overall, GDP growth in 2017 compared to 2016 was 7%. Analyzing the evolution of the Gross Domestic Product for the period , as quarterly achievements, by branches (activity domains) we can see that total GDP has tended to increase, as a rule, and so did the results obtained in these fields. It is noticed that during the economic and financial crisis, the GDP has decreased or decreased, as is the situation regarding the evolution by field of activity. During the crisis and immediately afterwards, the most spectacular jump had net taxes. We know that during that period, wages and pensions have fallen, and taxes have increased alarmingly. 20 Romanian Statistical Review - Supplement nr. 6 / 2018

5 Graficul nr. 1: Evolutia trimestrial a PIB serie ajustata sezonier în perioada % (media trimestriala a anului 2000=100) 280,0 230,0 180,0 130,0 80,0 30,0 2000T1 2000T3 2001T1 2001T3 2002T1 2002T3 2003T1 2003T3 2004T1 2004T3 2005T1 2005T3 2006T1 2006T3 2007T1 2007T3 Agricultura Industrie Constructii 2008T1 2008T3 2009T1 2009T3 2010T1 2010T3 2011T1 2011T3 2012T1 2012T3 2013T1 2013T3 2014T1 2014T3 2015T1 2015T3 2016T1 2016T3 2017T1 2017T3 Servicii Impozite nete de subventii PIB Agriculture has experienced oscillating evolution, with many downsides due to the general climate, in the context in which irrigation is more a wish than a concrete reality. Graph no. 1 presents the data on the quarterly evolution of the Gross Domestic Product by total and by area, in the period The Gross Domestic Product estimated for the fourth quarter of 2017 was ROL 25, million current prices, rising - in real terms - by 6.9% compared to the fourth quarter of The evolution of gross domestic product, as gross series, in the quarters of 2017 is presented in table no. 3. Data are expressed in absolute figures and relative figures. Gross domestic product quarterly in gross series Table no. 3 QI QII QIII QIV Year 2017 Millions of lei, current prices In% compared to the corresponding period of the previous year The data contained in this table shows that the Gross Domestic Product estimated for 2017 was ROL million current prices, rising - in real terms - by 7.0% as compared to Tables 4, 5 and 6 present the data on Gross Domestic Product in current prices, volume indices and deflators - gross series and seasonally adjusted series - for the fourth quarter and Revista Română de Statistică - Supliment nr. 6 /

6 Gross Domestic Product by Category of Resources and Uses in Quarter IV 2017 Table no. 4 Resources / Uses Achievements - millions of lei current prices - Volume indices - in% against IV quarter 2016 Price indices - in% against IV quarter 2016 Agriculture, forestry and fishing Industry Construction Wholesale and retail trade; repair of motor vehicles and motorcycles; transportation and storage; hotels and restaurants Information and communications Financial intermediation and insurance Real estate transactions Professional, scientific and technical activities; administrative service activities and support service activities Public administration and defense; social insurance in the public system; education; health and social care Performing, cultural and recreational activities; repair of household products and other services Gross value added - total Net taxes on product 1) Gross Domestic Product Actual final consumption Actual individual final consumption of households 2) Expenditure for final consumption of households Expenditure on end-use of non-profit institutions serving households Expenditure for individual final consumption of general government Final collective consumption of public administrations 3) Gross capital formation from which: Gross fixed capital formation Net exports of goods and services Export of goods and services Import of goods and services ) Represents the difference between product taxes owed to the state budget (VAT, excises, other taxes) and product subsidies paid from the state budget. 2) Includes: Household expenditure for purchasing goods and services to meet the needs of its members, spending on individual consumption of public administrations (education, health, 22 Romanian Statistical Review - Supplement nr. 6 / 2018

7 social security and social actions, culture, sports, leisure activities, domestic waste collection) and individual consumption expenditure of non-profit institutions serving households (religious organizations, trade unions, political parties, unions, foundations, cultural and sports associations). 3) Includes collective government spending (general public services, national defense and territorial security, maintaining public order and security, legislative and regulatory activities, R & D, etc.). In table no. 4 are presented, in the mirror, the contributions of resources and uses to the formation of the Gross Domestic Product. The data are expressed in absolute values of current prices and are compared, as volume and price indices, to the IV quarter Resources / Uses Gross Domestic Product by Category of Resources and Uses in Quarter IV 2017 Table no. 5 - seasonally adjusted series and number of working days- Volume Achievements Price indices indices - millions of -% in the -% in the lei current third quarter third quarter prices - of 2017 of 2017 Agriculture, forestry and fishing Industry Construction Wholesale and retail trade; repair of motor vehicles and motorcycles; transportation and storage; hotels and restaurants Information and communications Financial intermediation and insurance Real estate transactions Professional, scientific and technical activities; administrative service activities and support service activities Public administration and defense; social insurance in the public system; education; health and social care Performing, cultural and recreational activities; repair of household products and other services Gross value added - total Net taxes on product 1) Statistical discrepancy Gross Domestic Product Actual final consumption Revista Română de Statistică - Supliment nr. 6 /

8 Actual individual final consumption of households 2) Expenditure for final consumption of households Expenditure on end-use of non-profit institutions serving households Expenditure for individual final consumption of general government Final collective consumption of public administrations 3) Gross capital formation from which: Gross fixed capital formation Net exports of goods and services Export of goods and services Import of goods and services Statistical discrepancy ) Represents the difference between product taxes owed to the state budget (VAT, excises, other taxes) and product subsidies paid from the state budget. 2) Includes: Household expenditure for purchasing goods and services to meet the needs of its members, spending on individual consumption of public administrations (education, health, social security and social actions, culture, sports, leisure activities, domestic waste collection) and individual consumption expenditure of non-profit institutions serving households (religious organizations, trade unions, political parties, unions, foundations, cultural and sports associations). 3) Includes collective government spending (general public services, national defense and territorial security, maintaining public order and security, legislative and regulatory activities, R & D, etc.). In table no. 5 presents the situation of the Gross Domestic Product, structured on resources and uses. This time, it is noted that the data are presented as seasonally adjusted series according to the number of working days, and comparability is done by volume and price indices in the fourth quarter of 2017 compared to the third quarter of Romanian Statistical Review - Supplement nr. 6 / 2018

9 Gross Domestic Product by category of resources and uses in 2017 Table no. 6 - gross series- Achievements - millions of lei current prices- Volume indices - in% compared to year 2016 Price indices - in% against year 2016 Agriculture, forestry and fishing Industry construction Wholesale and retail trade; repair of motor vehicles and motorcycles; transportation and storage; hotels and restaurants Information and communications Financial intermediation and insurance Real estate transactions Professional, scientific and technical activities; administrative service activities and support service activities Public administration and defense; social insurance in the public system; education; health and social care Performing, cultural and recreational activities; repair of household products and other services Gross value added - total Net taxes on product 1) Gross Domestic Product Actual final consumption Actual individual final consumption of households 2) Expenditure for final consumption of households Expenditure on end-use of non-profit institutions serving households Expenditure for individual final consumption of general government Final collective consumption of public administrations 3) Gross capital formation from which: Gross fixed capital formation Net exports of goods and services Export of goods and services Import of goods and services ) Represents the difference between product taxes owed to the state budget (VAT, excises, other taxes) and product subsidies paid from the state budget. 2) Includes: Household expenditure for purchasing goods and services to meet the needs of its members, spending on individual consumption of public administrations (education, health, social security and social actions, culture, sports, leisure activities, domestic waste collection) Revista Română de Statistică - Supliment nr. 6 /

10 and individual consumption expenditure of non-profit institutions serving households (religious organizations, trade unions, political parties, unions, foundations, cultural and sports associations). 3) Includes collective government spending (general public services, national defense and territorial security, maintaining public order and security, legislative and regulatory activities, R & D, etc.). In the latter table, this gross group is based on gross series, gross domestic product output, by resources and uses, throughout the year 2017 compared to The current price developments are presented and the comparison is based on indices volume and annual price indices. From the three tables, the same evolution on uses and uses, as well as the weight of these factors in the formation of the Gross Domestic Product. Analyze the contribution of resource and use categories to changes in Gross Domestic Product Regarding GDP growth on resources, we note that progress has been made on all resource categories. As a result of GDP growth in 2017 compared to 2016, almost all branches of the economy contributed, with more positive contributions in the following branches: industry (+ 1.9%), with a share of 24.2% in the formation of GDP and whose volume of activity increased by 8.0%; wholesale and retail trade; repair of motor vehicles and motorcycles; transportation and storage; hotels and restaurants (+ 1.6%), with a share of 18.7% in GDP formation and whose volume of activity increased by 8.4%; agriculture, forestry and fishing (+ 0.7%), with a lower share of GDP formation (4.4%), but which recorded a significant increase in the volume of activity (18.3%); professional, scientific and technical activities; administrative service activities and support service activities (+ 0.7%), with a share of 6.9% in GDP formation and whose activity volume increased by 9.9%; net taxes on product (+ 0.7%), with a share of 9.7% in GDP formation and with a volume of activity increased by 6.5%. In table no. 7 are the data on GDP evolution by total and resource categories. 26 Romanian Statistical Review - Supplement nr. 6 / 2018

11 The contribution of resource categories to the formation and growth of Gross Domestic Product in the fourth quarter and 2017 Table no. 7 Contribution to GDP formation -% Contribution to GDP growth -% Q IV Year Q IV Year Agriculture, forestry and fishing Industry construction Wholesale and retail trade; repair of motor vehicles and motorcycles; transportation and storage; hotels and restaurants Information and communications Financial intermediation and insurance Real estate transactions Professional, scientific and technical activities; administrative service activities and support service activities Public administration and defense; social insurance in the public system; education; health and social care Performing, cultural and recreational activities; repair of household products and other services Gross value added - total Net taxes on product The gross domestic product Analysis of GDP formation and growth by categories of uses From the point of view of GDP, the growth was mainly due to: final consumption expenditure of households, the volume of which grew by 10.3%, contributing 6.4% to GDP growth; gross fixed capital formation, with a contribution of + 1.2%, as a result of the 5.4% increase in its volume. A negative contribution to GDP growth was recorded by net exports (-0.8%), as a result of the 9.5% increase in the volume of exports of goods and services correlated with a higher increase in the volume of imports of goods and services, 11.1%. In table no. Figure 8 presents the data on GDP formation and growth on the basis of uses. Revista Română de Statistică - Supliment nr. 6 /

12 Contribution of the use categories to the formation and growth of Gross Domestic Product in the fourth quarter and 2017 Table no. 8 Contribution to GDP formation -% Contribution to GDP growth -% QIV Year QIV Year Actual total final consumption Actual individual final consumption of households Expenditure for final consumption of households Expenditure on end-use of non-profit institutions serving households Expenditure for individual final consumption of general government Final collective consumption of public administrations Gross fixed capital formation Stock change Net exports of goods and services Export of goods and services Import of goods and services The gross domestic product Conclusion From the study undertaken, the authors deduced some conclusions, of which we mention first that the gross domestic product, with the small conceptual methodological modifications, taking into account the economic system traveled by Romania, represented and always represents the most complex indicator of the results of of the Romanian economy. The Gross Domestic Product per capita indicator is even more relevant in terms of comparability on the basis of this indicator of the evolution of the Romanian economy compared to the stage reached by other European Union or wider European or world countries. It is noted that in the case of the Romanian economy there is a discrepancy regarding the provision of financial resources, Romania resorting to credits, external public debt and other loans. As a final conclusion, we can assume that the Romanian system experienced certain periods during which growth was stagnant during the economic crisis in or , but also the strategy that the macroeconomic management had to ensure the development of the country under conditions which are reflected in gross domestic product. 28 Romanian Statistical Review - Supplement nr. 6 / 2018

13 References 1. Anghelache, C., Anghel, M.G., Marinescu, A.I. and Dumbravă, Ş.G. (2018). Complex Analysis of Gross Domestic Product at the End of Romanian Statistical Review, Supplement, 2, Anghelache, C. (2017). România Starea economică la un deceniu de la aderare, Editura Economică 3. Anghelache, C. and Anghel, M.G. (2017). Econometric methods and models used in the analysis of the factorial influence of the gross domestic product growth. Network Intelligence Studies, V (9), Anghelache, C., Anghel, M.G. and Stoica, R. (2017). Quarterly analysis of Gross Domestic Product evolution significance of growth rate. Romanian Statistical Review, Supplement, 6, Anghelache, C. and Anghel, M.G (2017). Analysis of the evolution of the Gross Domestic Product of Romania using defl ated data, International Conference Economic Experiences, Romanian Foundation for Business Intelligence, Transilvania University of Brașov, The Romanian Academy Iasi Branch, Anghelache, C. and Anghel, M.G. (2017). The econometric model used in the macroeconomic management, The 8 th International Conference of Management and Industrial Engineering Management in the Innovation Society, University Politehnica of Bucharest, Bhandari, P. and Frankel, J. (2015). Nominal GDP Targeting for Developing Countries, National Bureau of Economic Research, Working Paper 20898, Cambridge 8. Chamberlin, G. (2011). Gross domestic product, real income and economic welfare, Economic & Labour Market Review, 5 (5), Fleurbaey, M. (2009). Beyond GDP: The Quest for a Measure of Social Welfare. Journal of Economic Literature, 47 (4), Garin, J., Lester, R. and Sims, E. (2016). On the Desirability of Nominal GDP Targeting. Journal of Economic Dynamics and Control, 69, Macchiarelli, C. (2013). Similar GDP-inflation cycles. An application to CEE countries and the euro area. International Business and Finance, 27 (1), Institutul Național de Statistică, Comunicatul de presă nr. 54 / Revista Română de Statistică - Supliment nr. 6 /