IMF expects moderate economic growth but sluggish fiscal consolidation in Romania

The International Monetary Fund (IMF) has revised downward its estimates for the growth of the Romanian economy this year, to 1% from 1.6% as forecast in April and 3.3% as the advance indicated in October last year, according to the latest World Economic Outlook (WEO) report published on October 14. The forecast compares positively to the 0.6% official projection of the state forecasting body, CNP.

For the coming years, the IMF expects gradual economic consolidation with the growth rate reaching 3.3% in 2030.

On the fiscal consolidation side, however, the Fund expects Romania's general government budget to drop below 6% of GDP in 2026 from 8.2% in 2024, mainly due to lower expenditures. However, it does not expect much improvement over the next three years until 2029, when the gap would still reach 5.5%.

The public deficit would remain two percentage points above the 3% target in 2030.

The gross public debt is expected to reach 70% of GDP in 2030, following slower than planned fiscal consolidation and moderate growth.

The international financial institution is also more pessimistic about Romania's progress in reducing its current account deficit, which, according to the latest estimates, will only shrink to 8% of GDP this year, compared to a decline to 7.6% of GDP forecast in the spring.

In contrast, the IMF is more optimistic about the situation next year, when Romania's current account deficit is expected to shrink to 6.6% of GDP, a significantly better performance than a deficit of 7.4% of GDP forecast in April. Romania's CA gap would further narrow to 5% of GDP in 2030.

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