Consumer spending withstands VAT hike and salary decline

The major decline of agriculture, which took most analysts by surprise, and the continued decline of constructions and of trade dragged the economy down in the third quarter, deepening the decline to 2.5% compared with the similar period of last year.
Positive news came from the industry sector, which continued its rise, though at a slower pace, as well as from consumer spending, which only declined by 1.1% of GDP in the third quarter against the similar period of last year, compared with a 4.1% decline in the first quarter of 2010.
According to data announced by the National Statistics Institute, there was a 7.6% decline in the volume of activity in agriculture, which took the market by surprise.
"I cannot find an explanation for the progression of agriculture. Agriculture was expected to have either a positive or a neutral impact on GDP. There were no particular weather aspects that could be cited as factors. There were ordinary phenomena, with no major impact. 2009 was not an exceptional year in terms of weather, either, it was an average year," said analyst Aurelian Dochia.
Some clarifications came from the Agriculture Ministry, explaining the decline through the late harvesting.
"It is normal for agriculture to have a negative contribution for July-September. Harvesting was done later because of the massive rainfall. Normally, grain should have been harvested in July, but this year we finished the harvesting at the end of August," said Adrian Rădulescu, state secretary with the Ministry of Agriculture and of Rural Development.