Romania revises downward expected GDP growth to 2% this year and 3.4% in 2024

Romania's state forecasting body CNP revised this year's expected economic growth rate to 2%, from 2.8% previously, under the Autumn Forecast.

Industry (-3.1% y/y in value-added terms) and agriculture (+1.8% y/y) are responsible for slower-than-expected growth, according to the revised estimate, while construction performed above expectations (+7.8% y/y) and the sector of services is in line with the 3% y/y expected growth.

CNP also cut by 0.4 percentage points (pp) the projections for 2024 and 2025 to 3.4% and 4.2%, respectively. All the economic sectors will perform weaker than initially projected. Construction and services sectors are seen as the main growth drivers for the coming two years, while industry is seen as slightly recovering to +1.2% in 2024 and +3.6% in 2025.

On the demand side, both consumption and investments are revised slightly downward. However, there is a visible discrepancy between the (still significant) 2.2% and 3.4% growth of private consumption in 2024 and 2025 and the much stronger advance of gross fixed capital formation: 6.5% and 8.2%, respectively.

The current account deficit's trajectory was revised downwards in line with the more moderate growth to 7.1% of GDP this year (from 8.1% estimated in August) and 6.9% in 2024 (from 7.7% of GDP envisaged previously).

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