Romania Economic Forecast

Romania Economic Outlook

March 6, 2018

GDP growth continued at a strong rate in the fourth quarter in year-on-year terms, although the pace moderated from the third quarter. While a breakdown is not yet available, buoyant retail sales and declining unemployment in Q4 suggest growth continued to be driven by household consumption. The figure brought growth for 2017 to the highest level in nine years. However, the current account deficit almost doubled from 2016 on surging imports. Robust growth likewise translated into surging profits and declining Non-Performing Loans for Romanian banks, which bodes well for credit provision. In January, new car registrations jumped, putting the important automotive sector on a strong footing at the start of the year. Meanwhile, the political situation remains tense. In late February, there were large protests against the justice minister’s move to seek the dismissal of the chief of the anti-corruption directorate. Unrest, if protracted, could affect investor sentiment.

Romania Economic Growth

The economy should shift into a lower gear this year but nevertheless expand robustly, driven by consumer spending, which will be restrained by rising inflation and more moderate wage growth. Fixed investment growth is expected to gain steam on increased disbursements of EU funds and healthy credit expansion. However, a widening fiscal deficit limits the government’s room for maneuver in case of unexpected shocks, while continuing political turbulence constitutes the main downward risk to the outlook. FocusEconomics panelists expect growth of 4.5% for 2018, up 0.1 percentage points from last month’s forecast. They see the economy expanding 3.6% in 2019.

Romania Economy Data

Population (million)
GDP per capita (EUR)6,6347,2207,5368,0598,591
GDP (EUR bn)133145150160170
Economic Growth (GDP, annual variation in %)
Consumption (annual variation in %)
Investment (annual variation in %)0.6-
Industrial Production (annual variation in %)
Retail Sales (annual variation in %)
Unemployment Rate6.
Fiscal Balance (% of GDP)-3.7-2.1-1.4-0.8-3.0
Public Debt (% of GDP)37.337.839.438.037.6
Money (annual variation in %)
Inflation Rate (CPI, annual variation in %, eop)
Inflation Rate (HICP, annual variation in %)
Inflation (PPI, annual variation in %)4.8-0.1-1.4-1.70.9
Policy Interest Rate (%)
Stock Market (annual variation in %)-13.812.116.46.4-14.3
Exchange Rate (vs EUR)4.434.484.484.524.54
Exchange Rate (vs EUR, aop)4.464.424.444.444.49
Current Account (% of GDP)-5.0-1.1-0.6-1.2-2.2
Current Account Balance (EUR bn)-6.4-1.5-1.0-2.0-4.0
Trade Balance (EUR billion)-9.0-6.0-7.0-8.0-9.0
Exports (EUR billion)
Imports (EUR billion)
Exports (annual variation in %)
Imports (annual variation in %)
International Reserves (EUR)31.232.532.232.234.2
External Debt (% of GDP)74.867.863.056.554.4

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Romania Facts

Bond Yield4.610.23 %Mar 15
Exchange Rate3.77-0.34 %Mar 15
Stock Market8,688-0.59 %Mar 15

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