Erste revises 2021-2022 forecast for Romania's economy to reflect slower recovery

Austrian group Erste Bank, which owns Romania's second-biggest lender BCR, estimates a slower recovery of the Romanian economy.

Erste's analysts have revised the forecast for Romania's GDP growth in 2021 downwards.

Admitting that the economy performed below expectations in Q3, Erste's analysts maintained the -4.7% forecast for this year while factoring their expectations for a slower recovery in the next year's projections. Namely, they cut the forecast for next year to 2.7% from 3.9%, while increasing the growth forecast for 2022 from 3.7% to 4.5%.

"Economic developments in the third quarter were below our expectations of -4.9% year-on-year and Reuters/Bloomberg's median forecast of -4.4% / -4% per year. We believe that agricultural production below expectations is to blame for our forecast error," Erste's analysts said in a note, Profit.ro reported.

According to them, the new restrictions imposed to contain the new COVID-19 wave are reflected in a worsening outlook for the last quarter of 2020 compared to the initial scenario. However, the last quarter will not change the outlook for the full year, so the group's forecast for Romania's 2020 economic contraction (-4.7%) remains in line with previous estimates.

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