EBRD keeps economic growth forecast for Romania, while Bosnia & Herzegovina and Ukraine see worse outlook

The European Bank for Reconstruction and Development (EBRD) has kept economic growth forecast for Romania this year at 2.6%, according to its most recent report. The previous report issued by EBRD in May this year indicated the same estimated GDP growth. For 2015, the EBRD expects Romania’s economy to growth by 2.8%, after a 3.5% increase in 2013, and a mere 0.7% increase in 2012. In the south – eastern European region, the forecast for Romania in 2014 is the third highest, after Kosovo, with a 3.5% estimated growth, and FYR Macedonia, with 3%. The estimations for this year place Romania on the fourth spot in the same region, after Kosovo – 3.5%, Montenegro and FYR Macedonia – each 3%. Last year, Romania was among the best economic performers in the region, with a growth of 3.5%, the same as in Montenegro. Elsewhere in Central and Eastern Europe, most of the forecasts for 2014 stayed the same in EBRD’s outlook, with major changes occurring for Hungary, whose economy is expected to grow by 2.8% in 2014, up from the previous estimation of 1.2%. The positive shift for countries like Hungary and Poland was mainly a result of reinvigorated domestic demand in the region. However, the EBRD warned that there could be a negative impact from a Russian ban on EU food imports. A big change, but downwards, was recorded for Bosnia & Herzegovina, now expected to post a small growth of just 0.2%, from a previous forecast of 1.8%. A similar drop in forecast is noted for Serbia, which is now expected to see a drop of 0.5% in its economy, down from a forecasted growth of 1%. The EBRD foresees a big drop for Ukraine, whose economy would go down by 9% in 2014, worse than the previous estimation of 7% drop. “The case for quantitative easing has become compelling to support the still fragile recovery in the Eurozone, to which much of the (Central Europe and Baltic and south eastern European) regions are strongly linked. An effective Eurozone QE may help lessen the risk of setbacks in the recovery of those regions,” the report concluded. The full forecast report is here (in pdf, in English). Corina Chirileasa, corina@romania-insider.com