RO: Robust consumption suggests real GDP acceleration in 2Q24

Households consumption remained strong, with retail sales up +1.9% m/m and +10.0% y/y in June. Actual data came close to our forecast of +9.0% y/y.

We estimate retail sales growth at +6.5% in 2024 vs +1.9% in 2023. Strong real wage growth, lower unemployment rate in the first half of 2024 and acceleration in consumer lending are main drivers of household consumption.

Food sales were flat on the month (+0.1% m/m) and increased by +5.7% y/y, turnover for non-food items grew by +1.9% m/m and +13.3% y/y, while sales of car fuel jumped +4.4% m/m ahead of an announced increase in excise duty, while in annual terms they gained speed to +10.2% y/y.

Quarterly data shows retail sales up +1.6% q/q and +8.5% y/y in 2Q24 after +5.1% q/q and +5.5% y/y in 1Q24.

Retail trade confidence was little changed in July vs June as past business situation was assessed as weaker by managers, but future developments were seen more positive.

Consumer confidence climbed to a three-year high in June and retreated in July, while remaining above its long-term average. The average value of the consumer sentiment indicator in January-July 2024 was well above January-July 2023.

Consumer loans, outstanding, are currently increasing at an annual rate in the double digits boosted by a drop of almost 250bp in interest rates for new loans during the past year and easing credit standards due to tough competition between banks.