EBRD improves economic growth forecast for Romania despite crisis in the region

The European Bank for Reconstruction and Development (EBRD) has revised its economic growth estimation regarding Romania upwards to 2.6 percent in 2014, from 2.4 percent in the January forecast. For next year, EBRD expects Romania’s GDP to grow by 2.8 percent, according to the EBRD’s Regional Economic Prospects Outlook released on Wednesday (May 14). Romania and Poland are among the few countries in the region for which EBRD increased its forecast as the bank’s economists see modest growth in the region this year. EBRD lowered its estimations for a number of countries in Eastern Europe and the Caucasus region which will feel the adverse impact of the crisis in Ukraine and Russia. The average growth forecast for the South-eastern Europe (SEE) region, a group of countries that also includes Romania, is 2.2 percent for this year and 2.4 percent for 2015, which means that estimates for Romania are above the average. „The main drivers (for Romania – editor’s note) are exports and a pick-up in domestic demand. However, the high level of non-performing loans (over 20 percent of total loans), continuing cross-border deleveraging and increased uncertainties in neighbouring Ukraine, may weigh on growth prospects in the near term,” EBRD says in its report. The improved forecast for Romania from EBRD comes just days after the European Comission also improved its economic forecast for Romania and said it expects a 2.5 percent GDP growth in 2014 up from 2.3 percent in its previous estimate. The International Monetary Fund (IMF) sees a 2.2 percent economic growth for Romania this year, acording to its April outlook. Romanian officials are even more optimistic. Budget minister Liviu Voinea expects Romania to have a GDP growth of at least 4 percent this year, he said at EBRD’s anual meeting in Warsaw, according to Romanian media. Andrei Chirileasa, andrei@romania-insider.com