Romania Economic Forecast

Romania Economic Outlook

November 3, 2020

Following a record GDP drop in Q2, available data points to a gradual recovery in Q3. Industrial output fell less steeply in August, improving for the fourth month running. This, coupled with a softer drop in merchandise exports in July–August and stronger economic sentiment in Q3 compared to Q2, hints at a pickup in private sector activity. Less positively, surging Covid-19 cases prompted authorities to extend the state of alert on 15 October for a month and introduce new restrictions in Bucharest, boding ill for the recovery in Q4. In politics, polls indicate that the ruling pro-market PNL party is leading the race in the run-up to December’s general elections, although it is unlikely to secure an absolute parliamentary majority. Lastly, on 30 October, Fitch Ratings affirmed the country’s BBB- rating with a negative outlook, citing its moderate public debt.

Romania Economic Growth

The economy is expected to contract at the sharpest pace in over a decade this year before rebounding strongly in 2021. Strengthening foreign demand, particularly from German industry, is expected to bolster domestic production and ramp up exports. Nonetheless, the unpredictable course of the pandemic and political uncertainty ahead of the elections cloud the outlook. Our analysts see the economy growing 4.5% in 2021, which is up 0.1 percentage points from last month’s forecast, and 3.8% in 2022.

Romania Economy Data

2015 2016 2017 2018 2019
Population (million)19.919.819.619.519.5
GDP per capita (EUR)8,0748,6329,54510,47211,430
GDP (EUR bn)160171188204223
Economic Growth (GDP, annual variation in %)3.94.87.14.44.1
Consumption (annual variation in %)5.88.410.07.26.0
Investment (annual variation in %)7.20.03.5-1.017.9
Industrial Production (annual variation in %)2.81.87.83.5-3.3
Retail Sales (annual variation in %)9.512.410.85.57.2
Unemployment Rate6.85.95.04.23.9
Fiscal Balance (% of GDP)-0.6-2.6-2.6-2.9-4.3
Public Debt (% of GDP)37.837.335.134.735.2
Money (annual variation in %)9.49.811.58.910.9
Inflation Rate (CPI, annual variation in %, eop)-0.9-0.53.33.34.0
Inflation Rate (HICP, annual variation in %)-0.4-1.11.14.13.9
Inflation (PPI, annual variation in %)-  -  -  -  -  
Policy Interest Rate (%)1.751.751.752.502.50
Stock Market (annual variation in %)-1.11.29.4-4.835.1
Exchange Rate (vs EUR)4.524.544.664.664.78
Exchange Rate (vs EUR, aop)4.444.494.574.654.75
Current Account (% of GDP)-1.2-2.0-3.4-4.4-4.6
Current Account Balance (EUR bn)-2.0-3.6-6.0-9.2-10.2
Trade Balance (EUR billion)-7.8-9.3-12.2-14.8-17.0
Exports (EUR billion)49.152.257.261.963.0
Imports (EUR billion)56.961.569.476.780.0
Exports (annual variation in %)4.96.39.68.21.8
Imports (annual variation in %)6.68.112.810.54.3
International Reserves (EUR)32.234.233.533.132.9
External Debt (% of GDP)59.055.352.048.847.4

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Romania Facts

Value Change Date
Bond Yield4.490.23 %Dec 31
Exchange Rate4.26-0.34 %Dec 31

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