IMF improves 2020-2021 economic forecast for Romania

The International Monetary Fund (IMF) has improved its estimates for Romania's GDP evolution this year and in 2021, under the latest World Economic Outlook (WEO) published on October 13.

The IMF now estimates Romania's economy will decline by 4.8% this year, compared to a 5% drop envisaged in April, and trusts it will recover rather robustly by 4.6% in 2021, compared to a 3.9% increase projected in April.

The Fund's forecast is notably more optimistic than that of the World Bank, which expects a 5.7% contraction in 2020, followed by a 4.9% recovery in 2021, according to its latest forecast.

The IMF also improved its estimates on the current account (CA) deficit registered by Romania this year, to 5.3% of GDP compared to 5.5% seen in April. Next year, Romania's CA gap will narrow to 4.5% of GDP, under the Fund's scenario.

The new IMF estimates are also more optimistic about the evolution of the unemployment rate, which would still increase from 3.9% in 2019 to 7.9% in 2020 (10.1% estimated in April). However, the Fund expects unemployment to remain at the same level in 2021, and not drop to 6% as expected in April.

Globally, the IMF revised its projection to 4.4% economic contraction in 2020, less severe than the 4.9% under the previous WEO edition published in June.

"The review reflects developments above expectations in the second quarter, mainly in advanced economies, where activity began to improve faster than expected after restrictions began to be lifted in May and June, as well as indications of a strong recovery in the third quarter," the IMF says.

For 2021, the IMF is counting on a recovery of the world economy that would register an advance of 5.2%, slightly less than the 5.4% advance forecast in June.

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