COMPLEX ANALYSIS OF GROSS DOMESTIC PRODUCT AT THE END OF 2017

Transcription

1 COMPLEX ANALYSIS OF GROSS DOMESTIC PRODUCT AT THE END OF 2017 Prof. Constantin ANGHELACHE PhD Bucharest University of Economic Studies / Artifex University of Bucharest Assoc. prof. Mădălina-Gabriela ANGHEL PhD (madalinagabriela_anghel@yahoo.com) Artifex University of Bucharest Andreea - Ioana MARINESCU PhD Student (marinescu.andreea.ioana@gmail.com) Bucharest University of Economic Studies ec. Ștefan Gabriel DUMBRAVĂ (stefan.dumbrava@gmail.com) Abstract The Gross Domestic Product is the most tangible indicator of country results and it expresses how national resources were used over a one-year period. Following the economic-fi nancial crisis, which was very acute in Romania in , an economic recovery process started. Year-onyear, quarter-on-quarter, the results were more and more consistent. In this article we do not have the problem to look at how to grow the Gross Domestic Product, but we will highlight the evolution that was recorded especially in After a year with good results in 2016, 2017 started with sustained achievements. These are either calculated according to the previous quarter or against the same period of the previous year, showing an increase from one quarter to the next. Also, regardless of whether we analyze the gross series or the seasonally adjusted series, the results in 2017 are close in terms of rhythm growth. We know that Gross Domestic Product is calculated on the basis of initial data, then the semi-defi nitive version and, fi nally, the varied fi nal. From a methodological point of view, three steps are necessary to be able to record all data, eliminate errors and make estimates for the most recent data so that they are consistent with the level recorded.. In 2017, the Gross Domestic Product has risen from one period to the next, from 2015, and until this year, in the analyzed scenarios, there is no quarter in which we can see either a fall in the previous year or the of the previous quarter. The sustained rhythm shows that in 2015 growth was 4%, in % and now in % when comparing gross series data or 7% when calculating the seasonally adjusted series. Gross domestic product growth, driven primarily by consumption, is a positive step, but it needs to be further strengthened by moving to increase this indicator on both consumption and investment. By creating these prerequisites, we can anticipate a sustained growth of the Gross Domestic Product guaranteed for the next period, by achieving, in a higher percentage 132 Romanian Statistical Review - Supplement nr. 2 / 2018

2 of domestic investments, foreign direct investment and access to community funds. Keywords: Gross Domestic Product, growth rate, gross series, direct foreign investment, consumption JEL Classification: E20, O11 Introduction The Gross Domestic Product analysis was carried out on the basis of data published by the National Institute of Statistics. In a first part of the article, the authors focus on rising Gross Domestic Product in the quarter of Gross Domestic Product in the fourth quarter of 2017 and then on Gross Domestic Product growth over the entire year under review. In the survey we started from the fact that in 2017, every quarter, the Gross Domestic Product increased compared to the corresponding quarter of It was found that in the third quarter the growth was the highest, 8.8%, and the whole year, a preliminary analysis, by estimation, was an increase of 6.9% for growth in gross series and of 7% for growth given the seasonally adjusted series. The analysis of the evolution of the Gross Domestic Product quarterly, during the period , was carried out as seasonally adjusted series as well as gross series and it was revealed that this increase was, in general terms, higher than a quarter to another, the third quarter of 2017 being the peak quarter that showed a higher concern and the fourth quarter, based on estimates, is near but slightly below Q3. In the study, the authors use data series, graphical presentations and analysis at longer intervals. For example, we find that in an analysis carried out for the period 2000 to 2017, ie 18 years, the quarterly analysis reveals increases over the year 2000, taken as the base year. Summing up to interpret some results from , we see a slower pace of growth, due to the economic and financial crisis, which resulted in decreases in Q1 2009, Q2, Q3, Q4, and even some quarters of the following years. After 2011, the growth rate resumed and increases from one quarter to the next. Both data provided by the National Institute of Statistics and the data provided by EUROSTAT were used in the study. Literature review Anghel, Anghelache and Samson (2017) analyzed the evolution of gross domestic product in Romania in the third quarter and in the first nine months of 2017, specifying the contribution of the resource categories, respectively, to the formation and growth of the Gross Domestic Product. Anghelache and Anghel Revista Română de Statistică - Supliment nr. 2 /

3 (2017) presented the main methods and models that econometrics offers in view of the analysis of the factorial influence on the gross domestic product, realizing in this respect a study on the Romanian economy. Anghelache, Anghel and Stoica (2017) addressed issues related to the significance of the Gross Domestic Product growth rate in 2017 in Romania. Anghelache, Marinescu, Avram, Burea, and Bodo (2017) studied the relationship between gross domestic product and final consumption. Anghelache and Dumitrescu (2013) conducted a study on the evolution of gross domestic product in Romania, identifying the factors of change by category of resources and the evolution determined by the categories of uses, as well as the realization of the GDP by ownership forms. Anghelache and Anghelache (2013) addressed issues regarding the use of macroeconomic models in structural analysis of gross domestic product. Anghelache and Anghelache (2012) analyzed the evolution in recent decades of the correlation between gross domestic product and Romania s final consumption. Cicak. and Soric (2015) analyzed the relationship between foreign direct investment and gross domestic product in transition countries. Fleurbaey (2009), from the point of view of GDP, tried to identify a series of measures that would determine social welfare. Foerster and Choi (2016) surveyed GDP growth on consumption and recovery opportunities after the economic and financial crisis. Garin, Lester and Sims (2016) presented issues related to nominal gross domestic product. Koulakiotis, Lyroudi and Papasyriopoulos (2012) studied the correlation between gross domestic product and inflation in European countries. A similar theme is approached by Macchiarelli (2013), which analyzed the GDP-inflation relationship in the CEE countries and the euro area. Reis (2009) presented aspects of the extra cost of uncertainty and its impact on savings and investment. Research methodology, data, results and discussions Gross Domestic Product (GDP) is the most complete result indicator and expresses the level of macroeconomic activity over a period of time. For macroeconomic management reasons, GDP is calculated monthly, quarterly, and annually. This indicator is also calculated on the basis of raw data series and seasonally adjusted data series. It is also important to note that GDP is calculated in the current prices of the period in which it is made, and subsequently, in order to ensure the possibility of comparative analyzes, it is expressed in the prices of a reference period. This is accomplished by the deflagration process. At the same time, GDP is expressed in producer prices and in market prices. From the latter point of view, in the calculations made on the basis of the two prices, the level of GDP can be differentiated. We appreciate this because only the market (domestic or international) validates, up or down, the production costs. 134 Romanian Statistical Review - Supplement nr. 2 / 2018

4 Taking into consideration these methodological considerations, based on the data provided by the National Institute of Statistics, we will perform an analysis of how the Gross Domestic Product was produced in 2017, monthly, quarterly and annually. Thus, the Gross Domestic Product in the fourth quarter of 2017 was in real terms higher by 0.6% compared to the third quarter of This increase was achieved under the conditions of a consistent increase in the third quarter. Compared to the quarter-on-quarter level in 2016, Gross Domestic Product grew by 6.9% on gross series and 7.0% on seasonally adjusted series. By recalculating the seasonally adjusted series of the Gross Domestic Product quarterly, it is necessary to reconsider the resulting data. The revision of the gross series of GDP quarterly over the period was intended to reconcile the revised annual data following the implementation of the methodological changes related to the treatment of Eurostat s bookings on Gross National Income calculated. Also, the revision of gross quarterly GDP series for was due to reconciliation with annual data ( final version, semi-final version). At the same time, estimates were included for the fourth quarter of As a result of these revisions, the data series was modified from the primary version calculated on January 12, The evolution of the Gross Domestic Product quarterly between 2015 and 2017, calculated as gross series and seasonally adjusted series is presented in the following table. Evolution of Gross Domestic Product Quarterly Table no. 1 Q I Q II Q III Q IV Year - in % compared to the corresponding period of the previous year- Gross series Seasonally adjusted series in % compared to the previous quarter Seasonally adjusted series Source: Press release of the National Institute of Statistics no. 44 / Revista Română de Statistică - Supliment nr. 2 /

5 The above data show that between the quarterly evolution of GDP registered a steady growth compared to the corresponding period of the previous year. In 2015, quarterly increases were percent from the corresponding quarters of Under these circumstances, the annual growth was 4.0 percent. For 2016, compared to 2015, quarterly increases were between 4.3% and 6%, providing an annual growth of 4.8%. Year 2017 shows a high growth of 5.7% in the first quarter, 6.1% in the second quarter, 8.8% in the third quarter and 6.9% in the fourth quarter. Data for 2017 are based on gross series. The calculations made for the seasonally adjusted series are somewhat similar, with the fourth quarter, ie 2017 versus 2016, being 7%. Of course, for the year 2017 there will be revisions according to the methodology of the National Institute of Statistics but will not significantly change the estimated data. Comparing quarter-on-quarter GDP growth over the same period ( ), we see GDP growth, with the exception of Q2 / 2015, when it fell by 0.2% compared to Q1 / In the fourth quarter of 2017, Gross Domestic Product grew by 0.6%, compared to the same quarter of 2016, Gross Domestic Product (GDP) increased by 7.0%, which can be considered an annual growth. In order to better outline the evolution of GDP quarterly between 2000 and 2017, we presented the data in the following graph, based on the data in table no. 2. The Romanian Quarterly Gross Domestic Product in the period (seasonally adjusted data) (2000 average = 100) Table no. 2 Period 2000Q1 2000Q2 2000Q3 2000Q4 2001Q1 2001Q2 2001Q3 2001Q4 Volume Index (%) Period 2002Q1 2002Q2 2002Q3 2002Q4 2003Q1 2003Q2 2003Q3 2003Q4 Volume Index (%) Period 2004Q1 2004Q2 2004Q3 2004Q4 2005Q1 2005Q2 2005Q3 2005Q4 Volume Index (%) Period 2006Q1 2006Q2 2006Q3 2006Q4 2007Q1 2007Q2 2007Q3 2007Q4 Volume Index (%) Period 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 Volume Index (%) Period 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 Volume Index (%) Period 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 Volume Index (%) Romanian Statistical Review - Supplement nr. 2 / 2018

6 Period 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 Volume Index (%) Period 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 Volume Index (%) Source: National Institute of Statistics, the data being systematized by the authors. Grafic 1: Produsul intern brut trimestrial al României, în perioada (date ajustate sezonier) T1 2000T4 2001T3 2002T2 % (media anului 2000=100) 2003T1 2003T4 2004T3 2005T2 2006T1 2006T4 2007T3 2008T2 2009T1 2009T4 2010T3 2011T2 2012T1 2012T4 2013T3 2014T2 2015T1 2015T4 2016T3 2017T2 Perioada Source: Press release of the National Institute of Statistics no. 44 / Looking at the data in the chart and the table, we find that during the third quarter of the first quarter of 2008, there was a significant increase after which, as a result of the financial and economic crisis, continued until the third quarter of 2011 decreased. Comparing the data computed on a gross series with the same quarter of 2016, Gross Domestic Product in the fourth quarter of 2017 rose by 6.9%. Finally, in 2017, as compared to 2016, Gross Domestic Product grew by 7.0%, the highest growth rate among all EU Member States. In a deeper analysis, we can see that the evolution of GDP in 2017 was mainly based on increasing consumption and insignificant on the investment side. These issues are relevant if we analyze the growth of the macroeconomic indicator at a structural level, considering resources and uses. From this point of view, we will see that the total final consumption (private or public) has had an overwhelming share. Therefore, there is a prospect that GDP will grow at a similar rate in 2018 by allocating additional funds for investment, attracting foreign direct investment and, above all, by having access to Community funds. The interest of Romania s participation in the large-scale technical and economic objectives that are and will be initiated by the European Union will not be of interest. Revista Română de Statistică - Supliment nr. 2 /

7 At the end of the study we will make some clarifying clarifications. As a result of the revision of the gross quarterly GDP series to reconcile with annual data and the inclusion of the Gross Domestic Product for the fourth quarter of 2017 in the quarterly series, the seasonally adjusted series was recalculated, volume indices being revised against the second provisional of the Gross Domestic Product for the third quarter of In this respect, the results of the second quarter 2017 compared to the third quarter of 2017 were revised from 102.0% to 101.7% and the results of the third quarter of 2017 compared to the second quarter of 2017, were revised from 102.6% to 102.4%. Please note that seasonally adjusted series are recalculated quarterly as a result of changes to the adopted models, the number of regressions used, the change in gross series, and the number of observations available at the time of calculation. As mentioned above, the revised data do not express significant differences and, as a consequence, can be used in forecasting studies with a fairly high probability. Conclusion From the study, the authors concluded that in 2017 Gross Domestic Product recorded a constant growth rate from one quarter to the next. This increase was achieved both against the previous quarter, a progression and the same quarter of the previous year. Compared with similar quarters in 2015, increases are even more significant. From the study of the Gross Domestic Product growth on the resources and uses we find that the highest share in the increase of the Gross Domestic Product by uses is the final consumption, both private and public consumption. From this point of view, we conclude that in the period after the economic and financial crisis the growth of the Gross Domestic Product was mainly due to the general consumption of Romania. Another conclusion is that the growth of the Gross Domestic Product has been shameful on account of investments or access to EU funds as well as the attraction of foreign direct investment. It urges us to reflect that in order to attract foreign direct investment, sound, coherent and stable legislation is required to encourage foreign investors to increase their investments that have already triggered or to come up with new foreign investments those who, for more time, trying to get to invest in Romania. Of course, the work of analyzing, discussing, cooperating with countries that have the potential to invest, especially with multinational companies that are in contact with Romanian partners, but which still show some reservations regarding the start of investments in our country. Also, in a parallel study, we find that community funds in Romania have been rather cumbersome. Romania has a low percentage of access to EU 138 Romanian Statistical Review - Supplement nr. 2 / 2018

8 funds, especially non-reimbursable funds and, to the same extent, participation in large European projects. The theory of the European Union s development in two stages, some say that more, is actually based on the fact that concrete measures, viable projects to ensure completion and, at the same time, access to community funds must be undertaken. Of course, the pre-financing capacity is mandatory and Romania must take steps in this direction as well. References 1. Anghel, M.G., Anghelache, C. and Samson, T. (2017). Analysis of Quarterly GDP Evolution in Real Terms in Romanian Statistical Review, Supplement, 12, 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., Marinescu, A.I., Avram, D., Burea, D. and Bodo, G. (2017). Model analysis of the correlation between GDP and final consumption components. Romanian Statistical Review, Supplement, 2, Anghelache, C. and Dumitrescu, C. (2013). The Evolution of Romania s Gross Domestic Product. Romanian Statistical Review, 61 (1), Anghelache, C. and Anghelache, G.V. (2013). Macroeconomic Models Used in the Structural Analysis of the Gross Domestic Product. Romanian Statistical Review, 61 (6), Anghelache, C. and Anghelache, G.V. (2012). GDP and the final consumption of Romania. Evolution and correlation in the last decades. Metalurgia International, 8, Cicak, K. and Soric, P. (2015). The Interrelationship of FDI and GDP in European Transition Countries. International Journal of Management Science and Business Administration, 1 (4), Fleurbaey, M. (2009). Beyond GDP: The Quest for a Measure of Social Welfare. Journal of Economic Literature, 47 (4), Foerster, A.T. and Choi, J. (2016). Consumption Growth Regimes and the Post- Financial Crisis Recovery. Economic Review, Second Quarter Q (II), Garin, J., Lester, R. and Sims, E. (2016). On the Desirability of Nominal GDP Targeting. Journal of Economic Dynamics and Control, 69, Koulakiotis, A., Lyroudi, K. And Papasyriopoulos, N. (2012). Inflation, GDP and Causality for European Countries. International Advances in Economic Research, 18 (1), Macchiarelli, C. (2013). Similar GDP-inflation cycles. An application to CEE countries and the euro area. International Business and Finance, 27 (1), Reis, R. (2009). The Time-Series Properties of Aggregate Consumption: Implications for the Costs of Fluctuations. Journal of the European Economic Association, 7 (4), Comunicatul de presă nr. 44 / , Institutul Național de Statistică Revista Română de Statistică - Supliment nr. 2 /