Wiiw expects moderate fiscal consolidation in Romania to 5% of GDP in 2024

The Vienna Institute for International Economic Studies (wiiw) expectsthe economies of the 23 countries of Central, Eastern and Southeastern Europe (CESEE) to grow by 5.4% this year.

This is an upward revision of 1.2 pp, compared to the summer. In the case of Romania, the upwards revision measured 1.6 pp, and the final forecast for this year’s GDP growth is 6.8% - not far from the Government’s 7% estimate.

In the more narrow 11-country Central and Eastern Europe where the average growth is estimated at 5.3%, Romania ranks third after Estonia (+7.8%) and Croatia (+7.2%), but Croatia owes its performance to the low base effects (-8% in 2020).

For 2022, wiiw expects Romania’s economy to pick up by another 4.3% (4.5% projected in the summer) - slightly below the region’s average (+4.3%).

Regarding the budget deficit, the wiiw expects Romania to bring the gap down to 5% of GDP in 2034 (ESA methodology) from 9.2% of GDP in 2020 and 7% of GDP in 2021.

Under the excessive deficit procedure, Romania is supposed to bring the public deficit under 3% of GDP in 2024 - which implies a 2 pp correction in just one year (2024) - a scenario that seems not feasible in the light of the 2021-2023 trajectory.

Regarding the inflation forecast, wiiw envisages 4.2% average inflation this year (3.6% for the rolling 12-month period as of September, and rising) but only 4% in 2022 and 3.5% in 2023.

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