Erste Group revises Romania's 2021 growth outlook to 6.7%

Austrian financial group Erste revised its forecast upward for all the Central and Eastern Europe (CEE) countries where it operates.

Each of them will outperform the euro area's expected 4.4% advance, with the expected growth rates ranging from 3.7% in the Czech Republic to 6.9% in Hungary.

"Of course, it remains to be seen how the pandemic will evolve," said Bernd Spalt, CEO of Erste Group.

For Romania, Erste Group revised upward its forecast for this year's economic growth from 4.2% (in Q1) to 6.7%.

The Austrian group trusts the growth rate will remain robust in Romania in 2022 (+4.5%). As regards the causes of the resilience already demonstrated by the region, Erste Group says that although quarantine measures have significantly affected services and trade, the production sector - which traditionally plays a key role in the CEE region - has been much less affected overall.

Confidence in the region is also reflected in the evolution of its stock markets: in the first half of the year, the market capitalization of the main CEE indices increased by 17.6% as a weighted average, it also points out.

Furthermore, the group's analysts carried out an estimate of the Resilience Instrument's impact on each country's GDP - projected at between 1.2% GDP in 2026 (when the facility expires) in the Czech Republic and 2.9% in Romania.

The size of the disbursements under the facility differs significantly, with the biggest packages measured as a share of GDP being in Romania (13.4%) and Croatia (13%) and the lowest in the Czech Republic (3.2%).

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