Romania Economic Forecast

Romania Economic Outlook

July 31, 2018

Growth likely strengthened in Q2, following a sharp deceleration in Q1. Consumer spending appears to have regained some steam, benefiting from tight labor market conditions and wage gains, as retail sales were solid in April and May. Moreover, exports expanded at a solid pace in the same two months. However, data for the first five months of the year shows that the current account deficit widened significantly in annual terms. In addition, fiscal data for January-June continued to show a deterioration in the budget deficit, which does not bode well for the rebalancing of the economy. In early July, President Klaus Iohannis sacked the chief anti-corruption prosecutor following a constitutional court ruling saying he could not oppose a dismissal request by the justice minister. This is set to exacerbate the debate on the independence of the country’s judiciary between the government and EU institutions.

Romania Economic Growth

Higher inflation and a loss in consumer confidence should lead to a marked slowdown in consumer spending this year, denting GDP growth. Although the expansion in fixed investment should gain some strength, low EU funds absorption will limit the extent of the acceleration. Downside risks stem from widening fiscal and current account deficits. Met the why particular panelists expect growth of 4.1% for 2018, down 0.1 percentage points from last month’s forecast, and 3.6% in 2019.

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 Yield4.990.23 %Aug 07
Exchange Rate4.01-0.34 %Aug 07
Stock Market8,190-0.59 %Aug 07

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