EBRD relatively pessimistic about Romania's GDP growth this year

The European Bank for Reconstruction and Development (EBRD) revised slightly downward its forecast for Romania's economy, thus maintaining one of the most pessimistic scenarios for this year's economic growth: 1.7% under the latest version of the Regional Economic Update.

This is 0.2pp less compared to the previous scenario and a significant 0.8pp less compared to the European Commission's Winter Forecast (+2.5%).

When it comes to 2024, the EBRD is slightly more optimistic (+3.3%) and broadly in line with the consensus expectations.

Local independent analysts expect economic growth rates above 2% for this year under projections that have upward risks included.

The Government has drafted the budget planning for this year based on expectations for 2.8% growth. And most importantly, the flash estimate for last year's GDP growth indicates that the economic activity remained unexpectedly robust in Q4 (+1.1% QoQ in seasonally-adjusted terms).

Analysts of two major local banks, ING Romania and BCR, recently expressed expectations for growth rates above 2% this year based on the expected effects of the European funds.

"Regarding the economic growth, we see a slowdown to 2.1% this year, from 4.8% last year. The baseline scenario is based on investments, especially public investments financed by European funds," Ciprian Dascalu, chief economist of Banca Comercială Română (BCR), said at a conference on February 16, Economica.net reported.

ING Bank chief economist Valentin Tataru was slightly more optimistic, indicating 2.5% growth for this year with potentially more robust performance being driven by the sectors of construction, service or sub-sectors, such as transport or leasing and rental activities.

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