Romania’s state forecasting body CNSP maintained its optimistic forecast on the country's economic growth in its Winter Forecast issued on January 30.

CNSP projected a robust 5.5% GDP growth for 2019 followed by even stronger advance (5.7%) in 2020.

The revised forecast predicts a lower growth in investment this year, 6.9% compared to 7.9% as estimated under the Autumn Forecast. But this will be compensated by stronger domestic consumption, particularly stronger private consumption driven up by higher incomes.

The employment is indeed seen as rising at a slower rate: 3.4% in 2019 and 3.3% in 2020 compared to 3.8% and 3.7% respectively under the Autumn Forecast. The tighter labor market resulted in CNSP revising downward its forecast for the registered unemployment as well: to 3.2% at the end of 2019, compared to 3.7% projected last autumn.

But the real rise of the average wages was revised significantly upward to 11.8% increase this year after CNSP projected gradual deceleration of the real wages to 5.4% this year from 6.7% in 2018 (when it actually was 9.7%). As a result, the households’ consumption will rise by 6.1% (comparable prices) in 2019, under the Winter Forecast, compared to 5.8% expected under the Autumn Forecast.

The current account deficit fails to narrow in line with the CNSP’s Autumn Forecast: it was 4.5% of GDP in 2018 (under the Winter Forecast estimates, versus 3.1% of GDP projected in the autumn) and will ease to 3.3% of GDP in 2019 compared to expectations for 2.8% CA gap expressed in the autumn.

The CSNP's official forecast is used by the Government in drafting the budget. Last year, CNSP also expected a 5.5% economic growth rate but the actual growth rate was 4.1% in the first nine months, according to official reports from the National Statistics Institute (INS).

UniCredit forecast: Romania’s GDP growth to ease toward 2% in 2020

editor@romania-insider.com

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