IMF outlook: 1.6% growth in Romania in 2013, in-line with govt prediction, globally road to recovery still bumpy

The International Monetary Fund's (IMF) new World Economic Outlook for 2013 sees increasing differences in recovery from recession around the world. Whereas before, a “two-speed” recovery was noted, with developing and emerging economies growing faster and the more developed nations struggling to achieve growth, the IMF now describes the situation as “three-speed.” North-America is showing a markedly better performance than Europe, in particular the eurozone. Romania, like other emerging economies and some regional EU Member States, continues to show stronger growth than the neighboring eurozone, but, as ever, there are dangers to economic increase.

The IMF expects a 0.3 percent fall in GDP in 2013 for the eurozone and a return to growth, albeit a modest 1.1 percent, in 2014. Meanwhile, in the US, the IMF foresees 1.9 percent growth this year and 3 percent growth in 2014. For Romania, the IMF predicts real GDP growth of 1.6 percent this year and 2 percent in 2014. The estimate is the same as the Romanian government's 2013 prediction. Locally, estimates for GDP increase this year have ranged from as low as 0.5 percent up to as high as 2.8 percent, however most forecasts fall in the 1 – 2 percent range. Growth last year in Romania was of 0.3 percent according to the IMF. Romania lies below the IMF's emerging Europe averages, which are for 2.2 percent growth in 2013 and 2.8 percent in 2014. Looking further ahead, the IMF predicts a 3.5 percent GDP growth rate in Romania by 2018. The IMF's economic outlook puts unemployment in Romania at 7 percent for 2012, which tallies with the monthly European figures. The level is predicted to remain the same in 2013 before dropping slightly in 2014 to 6.9 percent. Consumer prices in Romania increased by 3.3 percent in 2012, according to the IMF. Something of a spike is expected this year, with a 4.6 percent rise foreseen, before a more modest 2.9 percent increase in consumer prices in 2014. Romania's current account balance will widen over the coming years; from minus 3.8 percent in 2012, to -4.2 percent this year and -4.8 percent in 2014. World output growth is forecast to reach 3.25 percent in 2013 and 4 percent in 2014. Although globally the economic prospects have again improved “the road to recovery in the advanced economies will remain bumpy,” reads the IMF's World Economic Outlook 2013. Romania's situation appears to be very much in line with the general picture for emerging economies, with a slow down in 2012, due in part to weak demand from developed nations, before a pick-up from the second half of 2013 onwards. Liam Lever, liam@romania-insider