Romania Economic Forecast

Romania Economic Outlook

January 8, 2019

Growth ticked up in the third quarter, although the slight acceleration was due to a surge in inventories which more than offset further cooling in consumer spending, still-falling fixed investment and a negative contribution from the external sector. In an attempt to curb the ballooning fiscal deficit, the cabinet approved a series of measures on 21 December, including a tax on banks’ assets designed to cap money market lending rates; taxes on energy and telecommunications companies; and an overhaul of the retirement system that allows Romanians, under certain conditions, to pull out of the mandatory private pension funds and switch to state management. The measures produced jittery reactions on the stock market, while analysts doubt they will bring the deficit below 3% of GDP. On the political front, the government survived a no confidence vote on 20 December, while on 1 January it took over the EU’s rotating presidency amid criticisms that the government is eroding the rule of law in the country.

Romania Economic Growth

Growth is set to slow further this year, as the expansionary effects of fiscal stimulus wane and consumer spending continues to cool due to weakening consumer confidence and smaller wage and job gains. Moreover, although growth in fixed investment is expected to strengthen, potential capital outflows and revisions of companies’ capital investment plans due to the deteriorated and unstable legal framework cloud the outlook. Further risks stem from the country’s sizeable twin deficits and frequent clashes with the EU over the rule of law. Met the why particular panelists expect growth of 3.4% for 2019, which is unchanged from last month’s forecast, and 2.9% in 2020.

Romania Economy Data

20132014201520162017
Population (million)20.020.019.919.819.6
GDP per capita (EUR)7,2207,5348,0758,6009,550
GDP (EUR bn)145150160170188
Economic Growth (GDP, annual variation in %)3.53.14.04.86.9
Consumption (annual variation in %)2.64.25.88.011.2
Investment (annual variation in %)-5.63.27.1-1.84.5
Industrial Production (annual variation in %)7.96.22.81.87.8
Retail Sales (annual variation in %)0.56.48.913.511.7
Unemployment Rate7.16.86.85.94.9
Fiscal Balance (% of GDP)-2.1-1.3-0.8-3.0-2.9
Public Debt (% of GDP)37.539.137.737.435.0
Money (annual variation in %)8.88.49.49.811.4
Inflation Rate (CPI, annual variation in %, eop)1.60.8-0.9-0.53.3
Inflation Rate (HICP, annual variation in %)3.21.4-0.4-1.11.1
Inflation (PPI, annual variation in %)-0.1-1.4-1.71.23.4
Policy Interest Rate (%)4.002.751.751.751.75
Stock Market (annual variation in %)26.19.1-1.11.29.4
Exchange Rate (vs EUR)4.484.484.524.544.66
Exchange Rate (vs EUR, aop)4.424.444.444.494.57
Current Account (% of GDP)-1.1-0.6-1.2-2.0-3.6
Current Account Balance (EUR bn)-1.5-1.0-2.0-3.6-6.3
Trade Balance (EUR billion)-6.0-6.0-8.0-9.0-12.0
Exports (EUR billion)44.047.049.052.057.0
Imports (EUR billion)50.053.057.061.069.0
Exports (annual variation in %)11.06.84.36.19.6
Imports (annual variation in %)2.06.07.57.013.1
International Reserves (EUR)32.532.232.234.233.5
External Debt (% of GDP)67.863.057.454.749.8

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Romania Facts

ValueChangeDate
Bond Yield4.940.23 %Jan 30
Exchange Rate4.16-0.34 %Jan 30
Stock Market7,044-0.59 %Jan 30

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