The European Commission has revised upwards its forecast on the growth of the Romanian economy in 2019, from 3.3% under the Spring Forecast, in May, to 4.1% according to the Autumn Forecast issued on November 7.
The Commission has also improved the forecast for next year’s growth from 3.1% to 3.6% while the growth rate for 2021 is expected to decline to 3.1%.
Besides the private consumption, spurred by increases in minimum and public sector wages, investment recovered in the first half of 2019 and is set to make a positive contribution to the local economy’s growth this year.
On the downside, risks to economic growth stem from both external and internal conditions. Externally, a potential slowdown in some of Romania’s main trading partners could negatively impact exports. Internally, political uncertainty could delay the restart of structural reforms and dampen efforts to reduce macroeconomic imbalances.
The general government deficit, in particular, is set to increase to 3.6% of GDP in 2019, from 3.0% in 2018 and the EC estimates it will reach 4.4% of GDP in 2020 and 6.1% of GDP in 2021, driven by significant increases in pensions decided in summer 2019.
(Photo source: Pixabay.com)
The European Bank for Reconstruction and Development (EBRD) revised upward its projection for Romania’s economic growth...