WB slashes 2020 growth forecast for Romania's economy to 0.3% under provisional scenario

The World Bank slashed its 2020 forecast for Romania’s economic growth by 3.5 percentage points to 0.3%, invoking “substantial” negative impact of the COVID-19 pandemic, under the World Bank’s Spring 2020 “Fighting COVID-19” report.

The WB’s forecast looks particularly optimistic compared to other updated projections from independent analysts, which have deteriorated abruptly over the past couple of weeks, capturing last-minute developments better than the WB’s comprehensive report. And indeed, the WB implies that the report reflects rather a provisional scenario.

The risk of a recession in 2020 is “substantial,” the World Bank’s analysts also warn, adding that the risk is growing as COVID-19 has brought to a halt large segments of the European economy and disrupted global supply chains and trade patterns.

The World Bank writes on a cautious note that “the [current] projection is done under the assumption that growth would gradually bounce back in the second half of 2020 and further accelerate in 2021” to 4.4%. The 4.4% GDP growth envisaged by WB under the provisional scenario in 2021, seems to be partly propelled by low base effects in this scenario, while the 3.9% growth expected in 2022 is closer to what seems to be WB’s medium-term potential growth rate for the country.

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