Banca Transilvania expects Romania’s economy to grow by 2.4% this year

Romania’s economy will further decelerate to a still significant 2.4% growth in 2023, from a 4.6% advance estimated for 2022, according to the updated projection published by the country’s largest financial group Banca Transilvania.

The Government based its budget planning for 2023 on slightly more optimistic expectations of 2.8% GDP growth. The most pessimistic forecasts for Romania’s economy’s advance this year were drafted by the European Commission (+1.8%) and Fitch rating agency (+1.6%), while the IMF and World Bank trust the country’s economy can grow by more than 3%.

The marked slowdown from 5.1% growth in 2021 is driven by the overlapping impact of the supply shocks and the events in Ukraine, including their consequences, the bank’s chief economist Andrei Radulescu explained, Ziarul Financiar reported.

Partial recovery will occur in 2024 when the country’s GDP is expected to rise by 3.7%.The projected recovery is based on expectations for productive investments accelerating to 7.6% in 2024, after steadily growing by 5.3% in 2022 and by 5.2% in 2023 against the background of low real financing costs and the implementation of European programs.

Private consumption is seen as decelerating from 7.1% in 2021 to 5.6% in 2022, respectively 3.3% in 2023, given that the high level of inflationary pressures has an unfavourable impact on households’ real disposable income.

Private consumption could accelerate to 4.5% in 2024, an evolution supported by the improvement of the climate in the labour market.

(Photo source: Banca Transilvania)