BRD-SocGen sees modest 1.4% economic recovery in Romania this year

Romania's third-biggest lender, BRD-SocGen - part of the French group Societe Generale, expects the local economy to rise by only 1.4% this year. This is "perhaps the most pessimistic forecast," the bank's chief economist Florian Libocor commented, adding that the consensus forecast is around or above 3%, Ziarul Financiar reported.

This forecast is based on the data available at this moment, he explained, implying that the outlook might change in the future.

Libocor also expressed expectations for interest rate cuts amounting to 50 bp (from 1.25% currently) this year.

Speaking in the same conference as the BRD-SocGen chief economist, Romania's National Bank (BNR) deputy governor Cristian Popa argued in favor of a brighter outlook for Romania's economic recovery this year. BNR expects the country's GDP to advance by 3-4% this year, Popa said.

However, both Libocor and Popa agreed that the main risks come from the uncertainties related to the fiscal policy.

"The budget consolidation, reducing the public deficit to 7% of GDP, is not easy. We are talking about a structural deficit in Romania, while in the western countries the deficits have increased on pandemic spending. The Government's commitment [for small deficits] is visible, and we hope they can maintain gradual consolidation," Popa said, quoted by Economica.net.

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