Romania Economic Forecast

Romania Economic Outlook

November 27, 2018

Economic growth accelerated in the third quarter, likely due to rising public spending. Data for the January-September period, for example, shows that the budget deficit more than doubled year-on-year, mainly due to public salary hikes. The widening deficit, together with the government’s wage and pensions hike plans, prompted the IMF at the end of its November staff visit to suggest that the country undertake substantial fiscal consolidation. In mid-November, Fitch Ratings also cited both points as risks to future macroeconomic stability, although nevertheless affirmed Romania at BBB-, with a stable outlook due to moderate levels of government debt. On 19 November, Prime Minister Viorica Dancila announced a government reshuffle, likely the result of an internal party struggle. The move is expected to give Liviu Dragnea, leader of the ruling Social Democratic Party and kingmaker of Romania’s government, a tighter grip over the cabinet.

Romania Economic Growth

A moderation in growth is expected in 2019, mainly due to slowing private consumption amid softening wage growth and weaker job gains. On the other hand, fixed investment should gain steam, although the scope of the acceleration could be limited by weakening business confidence and capital outflows due to the country’s sizeable twin deficits and frequent squabbles with the European institutions over controversial judicial reforms. FocusEconomics panelists expect growth of 3.4% for 2019, which is unchanged from last month’s forecast, and 3.0% in 2020.

Romania Economy Data

Population (million)
GDP per capita (EUR)7,2207,5348,0758,6009,550
GDP (EUR bn)145150160170188
Economic Growth (GDP, annual variation in %)
Consumption (annual variation in %)
Investment (annual variation in %)-
Industrial Production (annual variation in %)
Retail Sales (annual variation in %)
Unemployment Rate7.
Fiscal Balance (% of GDP)-2.1-1.3-0.8-3.0-2.9
Public Debt (% of GDP)37.539.137.737.435.0
Money (annual variation in %)
Inflation Rate (CPI, annual variation in %, eop)1.60.8-0.9-0.53.3
Inflation Rate (HICP, annual variation in %)3.21.4-0.4-1.11.1
Inflation (PPI, annual variation in %)-0.1-1.4-
Policy Interest Rate (%)4.002.751.751.751.75
Stock Market (annual variation in %)26.19.1-
Exchange Rate (vs EUR)4.484.484.524.544.66
Exchange Rate (vs EUR, aop)4.424.444.444.494.57
Current Account (% of GDP)-1.1-0.6-1.2-2.0-3.6
Current Account Balance (EUR bn)-1.5-1.0-2.0-3.6-6.3
Trade Balance (EUR billion)-6.0-6.0-8.0-9.0-12.0
Exports (EUR billion)
Imports (EUR billion)
Exports (annual variation in %)
Imports (annual variation in %)
International Reserves (EUR)32.532.
External Debt (% of GDP)67.863.057.454.749.8

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Romania Facts

Bond Yield4.770.23 %Dec 12
Exchange Rate4.11-0.34 %Dec 12
Stock Market8,568-0.59 %Dec 12

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