Romania Economic Forecast

Romania Economic Outlook

May 12, 2020

Despite starting 2020 on a healthy note, the economy has been derailed by the coronavirus outbreak and the country-wide lockdown introduced in late March to curb its spread. In particular, consumer spending, which has been the main driver of growth in recent years amid rapid wage increases and low unemployment, will be pummeled due to the state of emergency that was extended until 15 May. And although the government will begin relaxing containment measures from then onwards, domestic demand is likely to remain suppressed. Meanwhile, in the latter half of April, Fitch Ratings and Moody’s retained the country’s credit rating at the lowest investment grade of BBB- and Baa3, respectively, but downgraded their outlook from stable to negative due to deteriorating fiscal metrics. The government’s economic response to the pandemic, coupled with weaker revenues, has reduced the possibility that the 40% pension hike scheduled for September will go through, though uncertainty still abounds and will remain under close market watch ahead.

Romania Economic Growth

The economy is set to fall into recession this year as the Covid-19 pandemic has forced manufacturing companies to shut down operations, disrupted supply chains, and sequestered spending by households and firms. The already-fragile and worsening fiscal outlook, which raises the possibility of a credit rating downgrade to junk status, is also a major risk ahead. Our analysts see the economy contracting 5.5% in 2020, which down 2.4 percentage points from last month’s forecast, and expanding 5.1% in 2021.

Romania Economy Data

2015 2016 2017 2018 2019
Population (million)19.919.819.619.519.5
GDP per capita (EUR)8,0748,6329,54510,472-  
GDP (EUR bn)160171188204-  
Economic Growth (GDP, annual variation in %)3.94.87.14.4-  
Consumption (annual variation in %)5.88.410.07.2-  
Investment (annual variation in %)7.20.03.5-1.0-  
Industrial Production (annual variation in %)2.81.87.83.5-3.3
Retail Sales (annual variation in %)9.512.410.85.57.2
Unemployment Rate6.85.94.94.23.9
Fiscal Balance (% of GDP)-0.6-2.6-2.6-3.0-  
Public Debt (% of GDP)37.837.335.135.0-  
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-  
Current Account Balance (EUR bn)-2.0-3.6-6.0-9.2-10.5
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)59.055.352.048.8-  

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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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