Romania Economic Forecast

Romania Economic Outlook

October 2, 2018

Detailed data shows that GDP growth inched up in the second quarter, sustained by a robust expansion in consumer spending and a less negative contribution from the external sector. That said, the increase in private consumption was the weakest since Q4 2016. Moreover its pace of expansion decelerated for the third consecutive quarter, while fixed investment contracted, highlighting serious difficulties in the absorption of EU funds. Meanwhile, available figures for the third quarter suggest the economy has shifted into a lower gear from the impressive growth rates recorded in 2017. The healthy but decelerating retail sales growth in July indicates consumer spending has likely continued to increase, supported by a tight labor market but eroded by stubbornly high inflation. In the same month, construction output plunged in annual terms, which bodes poorly for fixed investment. Moreover, data for January–August shows that the budget deficit ballooned from last year, making negotiations with the European Commission on deficit containment more difficult.

Romania Economic Growth

Growth will decelerate further next year, restrained by cooling consumer spending and government sluggishness in using EU funds. Unless measures to reduce fiscal and current account deficits are taken, they will add to economic and financial instability in case of capital outflows stemming from the Fed tightening cycle and financial turbulence in emerging markets. Met the why particular panelists expect growth of 3.9% for 2018 and 3.5% in 2019, down 0.1 percentage points from last month’s forecast.

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 Yield5.030.23 %Oct 18
Exchange Rate4.05-0.34 %Oct 18
Stock Market8,600-0.59 %Oct 18

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