The European Commission (EC) expects Romania’s economic growth to slow down to 4.5% this year and 4% in 2019, according to the winter forecast released on Wednesday.
However, Romania’s estimated economic growth remains the highest in the EU this year.
“Economic growth in Romania accelerated in 2017, with real GDP estimated to have grown by 6.7% - a post-crisis high. The main driver of growth was private consumption, supported by indirect tax cuts and wage hikes both in the public and the private sectors,” reads the EC’s report on Romania.
“Looking ahead, GDP growth is forecast to decelerate to 4.5% in 2018 and 4.0% in 2019. The growth of private consumption is expected to be more tempered in 2018, as inflation weighs more heavily on real disposable incomes and wage growth slows down,” according to the same report.
However, private consumption is expected to continue acting as the main growth driver while Investment is forecast to strengthen on the back of higher EU fund absorption.
The EC expects salary increases to continue due to higher minimum wage and higher salaries in the public sector. The inflation rate is also expected to increase to 4.1% this year.