Romania Economic Forecast

Romania Economic Outlook

May 8, 2018

In the first quarter growth likely moderated further but remained solid, according to available data. Softer growth in retail sales suggests consumer spending lost some steam. Although supported by a strong labor market and rapidly rising wages, consumer spending was restrained by soaring inflation stemming from an overheating economy. Industrial production also moderated, reinforcing evidence that growth is easing from last year’s blistering pace. In mid-April, President Klaus Iohannis refused to comply with the interior minister’s request to fire the head of the country’s anti-corruption agency. Moreover, in late April Iohannis asked Prime Minister Viorica Dancila to step down due to foreign policy disagreements; she refused. Compounding political tensions, in early May the president announced he will not approve a controversial judicial reform sponsored by the government, a source of protracted friction between Romania and the EU. If political tensions persist, they could hit investor confidence.

Romania Economic Growth

This year growth should remain strong but moderate, held back by growing capacity constraints. Consumer spending will remain the main driver of growth, although it will be weighed down by rising inflation, while a pick-up in EU-backed investment projects will underpin fixed investment. However, a widening budget deficit due to an expansionary fiscal stance and a large current account deficit pose the main risks to economic stability. Met the why particular panelists expect growth of 4.6% for 2018, up 0.1 percentage points from last month, and 3.6% in 2019.

Romania Economy Data

20132014201520162017
Population (million)20.019.919.919.819.7
GDP per capita (EUR)7,2207,5368,0598,591-  
GDP (EUR bn)145150160170-  
Economic Growth (GDP, annual variation in %)3.53.13.94.8-  
Consumption (annual variation in %)2.64.25.87.5-  
Investment (annual variation in %)-6.83.87.2-2.2-  
Industrial Production (annual variation in %)7.96.22.81.8-  
Retail Sales (annual variation in %)0.56.48.913.5-  
Unemployment Rate7.16.86.85.9-  
Fiscal Balance (% of GDP)-2.1-1.4-0.8-3.0-  
Public Debt (% of GDP)37.839.438.037.6-  
Money (annual variation in %)8.88.49.49.8-  
Inflation Rate (CPI, annual variation in %, eop)1.60.8-0.9-0.5-  
Inflation Rate (HICP, annual variation in %)3.21.4-0.41.1-  
Inflation (PPI, annual variation in %)-0.1-1.4-1.70.9-  
Policy Interest Rate (%)4.002.751.751.75-  
Stock Market (annual variation in %)12.116.46.4-14.3-  
Exchange Rate (vs EUR)4.484.484.524.54-  
Exchange Rate (vs EUR, aop)4.424.444.444.49-  
Current Account (% of GDP)-1.1-0.6-1.2-2.2-  
Current Account Balance (EUR bn)-1.5-1.0-2.0-4.0-  
Trade Balance (EUR billion)-6.0-7.0-8.0-9.0-  
Exports (EUR billion)44.047.049.052.0-  
Imports (EUR billion)50.053.057.061.0-  
Exports (annual variation in %)11.06.84.36.1-  
Imports (annual variation in %)2.06.07.57.0-  
International Reserves (EUR)32.532.232.234.2-  
External Debt (% of GDP)67.863.056.554.4-  

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Romania Facts

ValueChangeDate
Bond Yield4.920.23 %May 21
Exchange Rate3.94-0.34 %May 21
Stock Market8,261-0.59 %May 21

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