BCR expects Romania's economy to contract by 4.7% this year

Romania’s second biggest lender, BCR, part of Austrian Erste Bank Group, expects the country’s economy to contract by 4.7% this year under the circumstances of severe eurozone recession amid the Covid-19 pandemic, Hotnews.ro reported

BCR’s analysts were expecting a 3.5% economic growth rate for this year before the Covid-19 crisis.

BCR projects a double-digit rate plunge in the second quarter, followed by a double-digit recovery in the third quarter, when the growth will be supported by the huge fiscal and monetary stimulus internally and externally. The steep GDP contraction combined with the robust fiscal stimulus will result in a public deficit of 7.3% of GDP, according to a scenario drafted by the bank’s analysts.

Subdued demand and supply side factors, mainly lower oil prices, have determined the BCR analysts to revise downwards the inflation forecast for the end of this year to 2.8%, compared to 3.4% under the pre-Covid-19 scenario.

BCR also believes that the current account deficit will be reduced to 3.5% of GDP this year compared to 4.7% of GDP in 2019.

(Photo source: Shutterstock)