The European Commission (EC) has revised upwards its economic growth forecast for Romania, for both 2019 and 2020, according to its Summer 2019 Economic Forecast.

Thus, following the strong growth in Q1, the EC expects Romania’s economy to grow by 4% in 2019 (up from the 3.3% estimation released in May), and by 3.7% in 2020 (up from 3.1% in the May forecast).

“Tight labour market conditions are expected to continue over the forecast horizon, with unemployment remaining close to its current, very low level. Wage growth is forecast to moderate to single digits in 2020, led by the expected slowdown in public wage growth,” the EC also said on its report on Romania.

The Commission also forecasts a headline inflation of 4.2% in 2019, and of 3.7% in 2020. “Annual consumer price growth remained strong in the first quarter of 2019, at 3.8%, and is expected to exceed 4% in the second quarter, before decelerating again. Rising unprocessed and processed food prices explain the strong upward price dynamics boosted by a depreciation of the currency at the beginning of the year and strong consumption and wage growth. As a result, annual headline inflation is expected to average 4.2% in 2019, before decelerating to 3.7% in 2020. The deceleration in 2020 is expected to follow moderating wage pressures and softer domestic demand,” the report reads.

Romania’s National Statistics Institute (INS) reaffirmed this week the 5% economic growth in the first quarter. The Romanian government expects the GDP to grow by 5.5% this year.

newsroom@romania-insider.com

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