Romania cuts 2022 growth target to 2.9%, closer to 2% consensus forecast

Romania’s state forecasting body CNSP revised downward its macroeconomic scenario, and now it projects 2.9% economic growth this year, under the Spring Forecast, compared to 4.3% under the Winter Forecast in February and 4.6% under the Autumn Forecast in November.

The growth is expected to return to normal in the coming years: 4.4% in 2023 and 4.8% in 2024.

The official projection for this year remains significantly above the consensus among independent analysts, which is around 2%.

The budget planning for 2022 is based on the Autumn Forecast, which assumed 4.6% GDP growth in 2022. However, the revised nominal GDP estimated by the CNSP is RON 1,328 bln, only slightly higher than the GDP assumed when the budget planning was drafted (RON 1,317 bln).

The inflation, expected to reach 4.7% on average this year under the Autumn Forecast but now seen at 10.1%, will compensate for slower real advance.

The economic growth will be driven this year by the sectors of constructions (+5.7%) and services (+3.4%), under the effects of the Relaunch and Resilience Program PNRR and of the Government’s efforts to boost investments, CNSP argues, while the industry will advance by only 1.5%.

On the utilisation side, both the goss fix capital formation (+4.8%) and the final consumption (+2.7%) were revised downwards.

The current account deficit is expected, under the Spring Forecast, to improve marginally to 6.9% of GDP this year from 7.0% in 2021.

CNSP expects the exchange rate to remain stable versus the euro, at an average exchange rate of 4.97 RON to EUR in 2022 and 5.03 RON to EUR in 2023.

(Photo source: Dreamstime.com)