Romania

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Economic growth will be faster in 2024 than in the previous year, despite a modest start. In spite of recovering household consumption and a rapid expansion in public consumption, GDP was up by only 1.6% in Q1, due to subdued investments and exports. Manufacturing production also declined in Q1, hit by reduced demand on Romania’s main export markets. Economic growth is set to accelerate in Q2 and beyond, as indicated by improving sentiment on the part of managers and an increase in new orders in manufacturing. Household demand will expand further as wages and pensions increase significantly faster than prices: in such circumstances, Romanians have a habit of spending rather than saving. Inflation was stubborn in Q1, due to a change in regulated prices, but it has moderated more recently. Disinflation will continue (albeit slowly) for the rest of the year, with some possibility of more rapid movement in the event of a bumper harvest. Labour shortages are again on the up, as indicated by the declining unemployment rate and increasing vacancies. The twin deficits of the general budget and the current account will barely shrink at all this year. Foreign financing is available, albeit at a higher cost than in other EU-CEE countries (due to Romania’s relatively poor, though stable, credit ratings). A real positive central bank base rate and a roughly constant exchange rate will stimulate the appetite of financial investors. Fiscal adjustments have been mild up to now, while deficits are growing faster than planned by the government. Stabilisation measures can only be expected after the parliamentary and presidential elections scheduled for later 2024. Monetary policy will continue to somewhat offset the loose fiscal policy by keeping the base rate above inflation. We have revised our 2025 growth forecast down from 3.3% to 3.1% in the expectation of stricter fiscal austerity than was earlier assumed. Household consumption will decelerate, while investment may pick up and the external balance may improve.
        FORECAST*
Main Economic Indicators202120222023202420252026
Population, 1000 persons191221904918900...
GDP, real change in %5.74.12.13.03.13.6
GDP per capita (EUR at PPP)239402667029350...
Gross industrial production, real change in %7.10.5-3.0...
Unemployment rate - LFS, in %, average5.65.65.65.55.45.2
Average gross monthly wages, EUR112512421418...
Consumer prices, % p.a.4.112.09.75.64.03.5
Fiscal balance in % of GDP-7.2-6.3-6.6-6.8-4.8-3.8
Public debt in % of GDP48.547.548.8...
Current account in % of GDP-7.2-9.2-7.0-6.8-6.0-6.0
FDI inflow, EUR m9933109027796...
Gross external debt in % of GDP56.550.652.4...


Basic data are continuously updated.

* Forecasts are changed beginning of January, April, July and November.
See Press Conferences.

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Monthly Report No. 7-8/2024

Vasily Astrov, Alexandra Bykova, Rumen Dobrinsky, Selena Duraković, Meryem Gökten, Richard Grieveson, Doris Hanzl-Weiss, Gabor Hunya, Branimir Jovanović, Niko Korpar, Sebastian Leitner, Isilda Mara, Olga Pindyuk, Sandor Richter, Bernd Christoph Ströhm, Maryna Tverdostup, Zuzana Zavarská and Adam Żurawski
wiiw Monthly Report No. 7-8, July-August 2024
45 pages including 5 Tables and 12 Figures

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Executive summary

Olga Pindyuk
in: The Crisis is Over, but its Scarring Effects are Hindering Recovery
wiiw Forecast Report No. Spring 2024, April 2024 , pp. I-VII
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