Romanian forecasting body upholds 7% GDP growth forecast for 2021

Romania’s strategy and forecasting body CNSP maintained its estimate of 7% GDP overall growth this year (but not the structure of the expansion) and revised slightly downward its projection for 2022 growth rate from 4.9% under the latest forecast in August to 4.6%.

It incorporated higher inflation and wider external deficits in the macroeconomic scenario.

The higher inflation assumed resulted in a 1.3% upward revision of the nominal GDP this year, likely to help the Government keep the public debt to GDP ratio not far from 50%, and an even larger 3.2% revision of the nominal GDP in 2022.

The structure of the economic growth this year (maintained at 7%) was rebalanced toward stronger expansion of the services (+6.8% in value-added terms) and agriculture (+20.3%), and a more moderate contribution of industry (+5.9%) and constructions (+0.2%). Next year, the industry will return to more sustainable growth rates (+4.4%), but the Recovery and Resilience Program may boost the construction sector activity (+9.0%) under the CNSP’s revised scenario.

The forecasting body revised the current account (CA) deficit to GDP ratio upward by roughly 1pp for both this year and next year. The CA gap will thus reach 6.3% of GDP this year (5.5% envisaged in August) and 6.1% (5.0% envisaged in August).

An even stronger revision was operated for the price dynamics, in line with the National Bank of Romania’s revised forecast.

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