Romania's Govt. drafts relatively optimistic economic forecast for 2023

Romania's economy is expected to decelerate to an annual growth rate of 4.6% in 2022 from 5.7% YoY in January-June but will recover to 2.8% in 2033 and much faster growth traits in the coming years: 4.8% in 2024 and 5% in 2025, according to the updated scenario published by the state forecasting body CNP.

The recovery is seen as driven by the sector of constructions (+5.9% in value-added terms, next year) stimulated by the investment projects (gross fix capital formation: +6.2%). In the years after 2023, the construction sector will keep rising far above average (+9.3% in 2024), but notably, the industry sector is believed to return to growth rates of between 4% and 5% per year.

The current account (CA) is realistically estimated at 8.5% of GDP this year, and CNP expects it to not drop significantly below 7% during the forecast period (6.8% in 2026).

The inflation is slightly more optimistic compared to the latest expectations expressed by the central bank (BNR), CNP envisaging 15.2% at the end of the year and 8% one year later. The real wages will partly recover next year (+1.7%) from the 2% loss estimated by CNP for this year.

Uncertainties and risks related to the current economic forecasts remain high, CNP admits: "there is a risk of lower economic growth, smaller profit margins and eroding purchasing power. At the same time, inflation will be fueled by the channels of transmission of high costs from the producer to the final prices for the consumer. Also, the high prices of imported goods put additional pressure on the current account."

On the other hand, the forecast notes that there are prerequisites for economic growth beyond expectations, supported by the implementation of the National Recovery and Resilience Plan (PNRR).

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