Romania revises upwards official forecast for this year’s GDP growth to 3.5%

Romania’s state forecasting body CNSP revised its forecast for the country’s economy to accommodate stronger private consumption and, on the production side, more active operations in the sector of services - according to the Summer Forecast published on July 21.

The external deficit (trade, current account) is now seen as wider than under the Spring Forecast and the rise of prices (consumer prices, GDP deflator) is revised upwards as well.

Thus, the GDP is now projected to rise by 3.5% (2.9% under Spring Forecast) in 2022 and 3.7% in 2023 (4.4% under Spring Forecast). Notably, the combined growth in the two years is revised marginally down.

The GDP deflator - the best indicator for the overall rise of prices in an economy - was revised 3pp upwards to 12.2% this year and by 1.5pp to 6.8% in 2023.

As regards the economy this year, the forecast for all the economic sectors was revised downwards except for that of services, which is expected to expand by 4.8% YoY (+3.4% YoY under the Spring Forecast). Agriculture is seen as generating 3.4% less value added compared to last year (-0.4% under the Spring Forecast) and industry will expand by only 0.6% YoY (+1.5% under Spring Forecast) in terms of value added.

The outlook for the sector of constructions remains robust, despite a slight downward correction to 5.0% YoY from 5.7% YoY.

On the utilisation side, consumption is seen as growing by 3.2% YoY this year (+2.7% under Spring Forecast) - faster than the gross fix capital formation seen at +3.7% YoY in 2022 (+4.8% under Spring Forecast).

The current account deficit will expand to 7.9% of GDP this year and 7.3% in 2023 - an upward revision from 6.9% and 6.7%, respectively.

(Photo source: Antonyesse/Dreamstime.com)