Disappointing Q4 GDP figures pour cold water on Romanian analysts' projections

Romanian analysts have lowered their economic growth estimates for 2022 after the statistics office INS released on February 15 disappointing Q4 GDP figures. The analysts expected a growth rate of 6%-7%, compared to the 5.6% announced by the INS.

BCR Bank, part of Erste Bank Group, has revised its 2022 GDP growth forecast downwards to 3.2%, from 4% previously anticipated. BCR expected 6.3% GDP growth for 2021.

The risk balance for the BCR forecast is slightly upward, based on high-frequency data indicating GDP revisions, BCR chief economist Ciprian Dascalu said, Ziarul Financiar reported.

ING Romania has reduced its growth forecast for Romania's economy in 2022 from 4.5% to 3.2% while maintaining the growth forecast for 2023 at 4.5%, according to a research report from Valentin Tataru, the chief economist of ING Romania. The 0.5% QoQ contraction in the fourth quarter of 2021 came against market/ING expectations for 0.8%/1.0% expansion, the report reads.

Despite the weaker growth background, the ING economist expects the central bank to continue increasing the refinancing rate up to 4.00% this year, a level which – given the high inflation – could not be considered as hindering growth.

ING also evaluates the effects of higher nominal GDP combined with a slower real growth rate. "We think it is worth pointing out that in nominal terms, the GDP might expand even beyond the metrics taken into account by the government for the 2022 budget. Essentially, this is due to the higher inflation. Hence, a lower than estimate real GDP growth might not be as troublesome for the policymakers, at least not as long as it doesn't turn into a recession, which is not likely in our view."

"We will review the central macroeconomic scenario for Romania in March after the INS publishes [detailed] provisional estimates on the dynamics of GDP and components in 2021," Banca Transilvania chief economist Andrei Rădulescu said, quoted by Ziarul Financiar.

The most recent macroeconomic forecasts for Banca Transilvania indicate the growth prospect of the domestic economy with annual rates of 5.1% in 2022, 4.7% in 2023 and 4.1% in 2024, respectively.

(Photo source: Shutterstock)