Most analysts expect Romania’s economy to decline this year

A survey among bank analysts carried out by Ziarul Financiar revealed expectations for this year’s GDP growth in the range of +1.8% (Erste Group Bank) and -3.9% (baseline scenario of BRD - SocGen).

However, the head economist of BCR, the Romanian subsidiary of Erste Bank Group, hinted that the projection is being revised downward (for the fourth time in just over two weeks) to the negative territory.

Romania’s economy will fall by 2.5% this year, but it will recover next year when the growth will return to a robust 4.5% rate (on low base), according to estimates of Raiffeisen Bank Romania.

On a similar note, ING Bank Romania, which is forecasting a 0.9% GDP contraction this year, expects a sudden slowdown in the first half of 2020 followed by a comeback period by the end of the year. Both institutions believe that the second quarter will be a "terrible" one.

The steepest plunge is expected by BRD-SocGen, which expects a 3.9% GDP plunge this year, under a baseline scenario (the optimistic scenario is -0.5%, and the pessimistic one is -7%).

Under its latest projection, Erste Bank Group projected 1.8% GDP growth for Romania this year - but Ciprian Dascalu, head economist of Erste’s Romanian subsidiary BCR commented on a more pessimistic note implying that the 1.8% projection is rather outdated.

“We had a good January and February, if we look at industrial production, retail sales, even confidence indicators. It is difficult to say how bad March was. Probably the second quarter will show a fairly strong decrease compared to the first quarter. It is not impossible, it depends on how much the situation is prolonged, to witness a double-digit quarter-on-quarter decrease, followed by a similarly strong recovery in the third quarter. Overall, the economy will record a slight decrease for the entire year,” said BCR's chief economist at theZF Live business show.

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