BUCHAREST - The Romanian economy fell into recession in the second quarter of the year, official data showed on Wednesday but the downturn was less severe than thought, helped by a new inclusion of illegal activities.

Output fell by 0.9 per cent from the level of gross domestic product in the first quarter, the national statistics institute INS said. INS had estimated initially that output had shrunk by 1.0 per cent.

And at the same time it raised slightly its figures for how the economy performed in the first quarter, saying it shrank by 0.1 per cent instead of by 0.2 per cent estimated previously.

However, in the first six months of the year, the economy grew by 2.6 per cent from output in the same period of last year, after adjustment for variable seasonal factors. For the whole of this year, the government is hoping for growth of 2.2 per cent. The widely accepted definition of recession is two quarters running of shrinking output from activity in the previous quarter. But the improved revision for activity in the second quarter reflected a change in how the calculations are made, in line with a new policy by EU Commission authorities in Brussels.

The Commission says that growth data by European Union countries should now include illegal, or undeclared, activities such as drug dealing and prostitution.

An INS official, Adriana Ciuchea, said recently that such activities could account for 0.1-0.2 per cent of all activity in the Romanian economy.

The EU statistics arm Eurostat gave EU countries until September 1 to include illegal but wealth-creating activities in their national statistics, on the basis that such activity is based on freely agreed commercial transactions.

In the second quarter, the biggest contribution to Romanian GDP came from the industrial sector which contributed 0.7 per cent, but this was offset in part by shrinkage of 0.3 per cent of activity in agriculture.

Last year, the Romanian economy grew by 3.5 per cent to show one of the highest growth rates in the 28-member European Union.