Romania’s economic growth in Q3 likely in the lower single-digit area

Romania's economy will post a single-digit GDP advance in the third quarter of this year compared to the second quarter, BCR analysts estimate in a research update.

Other banks also forecast a quarterly growth rate in the lower single-digit area. Romania saw "the peak" of the economic crisis caused by the Covid-19 pandemic in the second quarter when the economy contracted by 12.3% due to implemented restrictions.

The statistics office INS will release its flash estimate for Q3 GDP on November 13. In March, BCR projected a 4.7% GDP contraction this year, followed by a 3.9% recovery in 2021, and it has not revised its forecast so far.

Under the bank's March scenario, the country's GDP would have plunged by a double-digit rate in Q2 (the decline was, indeed, 12.3% quarter-on-quarter) to recover by a double-digit rate in Q3, Bursa.ro reported.

The recovery "could be slower than initially estimated", BCR says in its updated report.

But this should not come as a surprise, since the Q2 contraction was not as deep as broadly expected.

Separately, ING Romania's head economist Valentin Tataru sketched his quarterly forecast in annual terms.

He expects that Q3 GDP will be 7.4% lower than in the same quarter last year, and that the yearly contraction will ease to 4.9% in Q4. This results in a full-year GDP decline of some 5.1% in full 2020.

In quarter-on-quarter terms, ING thus expects growth rates of around 4% in Q3 and Q4. For 2021, the bank is quite optimistic, envisaging a 5.2% increase.

The latest update from the European Bank for Reconstruction and Development (EBRD) envisages that Romania's economy will contract by 5% this year (followed by a 3% recovery in 2021), consistent with quarterly growth of up to 5% in Q3.

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