Erste Group cuts forecast for Romania’s growth this year to 2.8%

Austrian group Erste, the owner of Romania’s bank BCR, estimates a 2.8% growth for Romania’s economy - only 0.4pp down from the previous estimate before the start of the military conflict in Ukraine. It is an optimistic view compared to the consensus and close to the official target.

According to Erste Group’s report on the Central and Eastern European (CEE) economies, published on April 29, Romania would enjoy the third-highest growth among the countries in the region, after Hungary, which would register an increase of 4.8% this year, and Austria, where a rise of 3.5% is expected, Ziarul Financiar reported. On the other end, there is the Czech Republic, with an estimated growth rate of only 0.6% and Slovakia, with 2%.

The report also shows that Romania would register an inflation rate of 10.2% this year, with only the inflation in the Czech Republic being higher:11.7%. The lowest inflation is expected in Austria, 5.5% this year.

Last week, the state forecasting body CNP published the Spring Forecast envisaging 2.9% growth this year, a brutal revision from the overly optimistic 4.3% projection maintained in February under the Winter Forecast. Last November, the Government drafted the budget planning with expectations for 4.6% growth this year.

Despite the recent revision, CNP expects nominal GDP to exceed the projections in November since the inflation turned out to be much higher.

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