RO state forecasting body CNSP revises forecast for 2022 growth to 4.3%

The National Strategy and Forecast Commission (CNSP) revised its forecast for Romania’s economic growth this year to 4.3%, under the Winter Forecast dated February 11, from 4.6% projected under its previous November 15 Autumn Forecast.

At the same time, CNSP adjusted the estimate for last year’s growth rate to 6.2%, from 7.0% under the Autumn Forecast.

The revision reflects the higher inflation in the last quarter of 2021, the high energy prices that will prevail “especially during the first part of 2022,” and the effects of the 5th wave of the pandemic, CNSP says.

It does not incorporate possible effects generated by the outbreak of a conflict in Ukraine.

In the meantime, the statistics office INS issued a flash estimate of 5.6% for last year’s economic growth.

According to CNSP, final consumption will slow down to a 3.6% growth rate this year, from 5.3% in 2021.

The investments (gross fixed capital formation) is still expected to grow significantly by 9.1% this year (9.3% envisaged under the Winter Forecast) after the more moderate 5.1 % advance in 2021 (8.2% under Winter Forecast).

The GDP deflator for this year is revised to 6.1% under CNSP’s Winter Forecast, from 5.8% previously, while the average consumer price inflation is seen at 9.9% in 2022 - a sharper leap from 6.5% projected under the Autumn Forecast. In our view, there are reasonable grounds to expect a higher GDP deflator, with the consequence of larger nominal GDP.

The trajectory for the country’s external deficit - the current account (CA) gap - was revised upwards and incorporates the wider than expected deficit in 2021: 7% of GDP, compared to 6.3% projected under the Winter Forecast.

The CNSP expects the CA gap to slightly narrow at 6.7% of GDP this year and to remain above 6% of GDP in 2023 (6.3%), compared to 6.1% and 5.8% estimated under the Winter Forecast.

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