Romanian central bank's governor sees 1% or higher economic growth this year

National Bank of Romania (BNR) governor Mugur Isărescu, on November 14, while unveiling the Inflation Report, argued that the Romanian economy will most likely not record two consecutive quarters of negative growth, which would mean entering a recession, but even in such a scenario, the evolution for the entire year will be positive, of approximately 1%.

He stressed that the [January-September] growth is 1.5% y/y already, Profit.ro reported.

"I'm telling you now, based on hope and my own experience, that we will not witness two consecutive quarters of negative growth, which would define a recession. But anyway, even in this event, assuming negative quarterly growth in Q4, for the whole year the economic growth will still be positive, something around 1%. Now [January-September] it is around 1.5% y/y, according to the flash [report from the statistics office INS]," said Mugur Isărescu, asked by journalists how he sees the decrease recorded in the third quarter of the economy.

He mentioned that the BNR is doing everything it can to bring inflation down and not exacerbate the recession.

Governor Isărescu explained that the central bank understands the challenges the government faces in reducing the pro-cyclical nature of fiscal policy and, therefore, it abstains from conducting hawkish monetary policies that would further hinder growth.

BNR kept the monetary rate at 6.5% at this month's Board meeting. Compared to headline inflation rates of nearly 10% y/y, this would seem extremely dovish – but may not be, actually, given the transitory nature of the inflation.

BNR expects the headline inflation to ease down to 3.7% by the end of 2026, from 8.8% y/y expected at the end of this year.

(Photo source: Inquam Photos/George Calin)