World Bank estimates Romania’s economy grew by only 1.8% in 2023

The World Bank estimates Romania’s economy decelerated to a 1.8% growth in 2023 from 4.7% in 2022, a significant 0.8 percentage points (pp) revision from its past projection dating from last June – according to the January issue of the Global Economic Prospects.

Local analysts who issue projections with a higher frequency improved their estimates for 2023 (still, not far from WB’s figure) recently, after gloomier sentiment during the autumn. In December, ING marginally rose its full-year growth forecast from 1.5% to 1.7%, with the risk balance still tilting upwards.

The European Commission said in mid-November that it expected Romania’s economy to grow by 2.2% in 2023 — above the consensus forecast (at that time) — and to accelerate in 2024-2025 to 3.1% and 3.4%, respectively, under the Autumn Forecast.

In the first three quarters of the year, Romania’s GDP increased by only 1.4% y/y after the sluggish advance of just over 1% y/y in Q2 and Q3. A high-magnitude revision from 1.1% y/y prompted some optimism among analysts, but base effects are not favourable to a significant economic comeback in Q4.

WB also slashed its projection for this year’s economic growth by 0.3pp to 3.3% – not far from the government’s 3.4% assumption used for drafting the year’s public budget. A stronger advance of 3.8% y (+4.1% projected last June) is expected for 2025.

The World Bank warned that in 2024, the world economy will slow down for the third consecutive year to 2.4%, after 2.6% in 2023, 3% in 2022 and 6.2% in 2021 – when a comeback after the end of the pandemic was visible.

(Photo source: Deanpictures/Dreamstime.com)