Inflation remained in negative territory at the end of 2015, in line with central bank projection, Governor Mugur Isarescu stated on Friday in a press conference, after BNR decided to maintain the key interest rate to 1.75 percent.
“Behind this stood mainly the broadening of the scope of the reduced VAT rate to all food items, non-alcoholic beverages and food service activities starting June 2015,” he explained.
The annual inflation rate touched -0.9 percent in December 2015, compared with -1.1 percent in November and the record low of -1.87 percent seen last August. The rise was attributed to the base effects stemming from fuel price movements, faster pick-up in tobacco product prices, as well as the influences of the swifter narrowing of negative output gap and the relative weakening of the local currency.
In the absence of the measure on broadening the scope of the reduced VAT rate, the annual inflation rate would have neared 2 percent at year-end, standing inside the ±1 percentage point variation band of the 2.5 percent target.
GDP growth gathered momentum in 2015 Q3. The fastest annual rates of increase saw the tertiary and construction sectors (more than 5.5 percent), in contrast to the still modest dynamics in the industrial sector and sharp decline in the agricultural sector. A differential between pay rises and labour productivity gains is manifest in the industrial sector.
As for demand, according to BNR data, the largest contribution to GDP advance made further final consumption, to which added, this time around, a favourable performance of net exports. In this context, the current account deficit remained below 1 percent of GDP over the first three quarters of 2015, with the wider trade gap being largely offset by an upward path in the services surplus.