Romania Economic Outlook
July 3, 2018Economic activity slowed sharply in the first quarter but likely regained some speed in the second quarter. Soaring inflation and rising interest rates dragged heavily on private consumption in Q1, leading to a marked slowdown in GDP growth. However, strengthening retail sales and industrial production in April and the low unemployment rate in both April and May suggest activity accelerated in Q2. On the other hand, surging inflation and widening fiscal and current account deficits are clear signs of overheating. In early June, the IMF warned the government to tighten its fiscal policy and moderate wage increases to guarantee more sustainable and balanced growth. Meanwhile, the political scene remains tense. On 27 June, parliament rejected a no-confidence motion against the government. The motion was presented by the opposition after the powerful leader of the ruling Social Democratic Party, Liviu Dragnea, was sentenced to over three years in jail for abuse of office. Due to political volatility, the 10-year bonds yields reached an over four-year high in late June, and investor sentiment could be further hit going forward.
Romania Economic GrowthGrowth is expected to moderate notably this year. Despite ongoing fiscal stimulus, faster inflation will weigh on household spending. Moreover, an inefficient absorption of EU funds will likely restrain fixed investment growth, which will nevertheless accelerate from last year. Large fiscal and current account deficits represent clear downside risks. FocusEconomics panelists expect growth of 4.2% for 2018, down 0.2 percentage points from last month’s forecast, and 3.6% in 2019.
Romania Economy Data
5 years of Romania economic forecasts for more than 30 economic indicators.
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|Bond Yield||5.01||0.23 %||Jul 17|
|Exchange Rate||3.97||-0.34 %||Jul 17|
|Stock Market||8,005||-0.59 %||Jul 17|
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Romania Economic News
July 12, 2018
Industrial output expanded a weak 1.2% in annual terms in May, decelerating from April’s 3.6% growth rate.
July 11, 2018
Consumer prices remained flat over the previous month in June, following a 0.5% rise in May.
July 4, 2018
At its monetary policy meeting on 4 July, the National Bank of Romania (NBR) decided to keep the policy rate unchanged at 2.50%.
June 12, 2018
Consumer prices jumped 0.5% in May over the previous month, matching April’s rise.
June 12, 2018
Industrial output expanded 3.6% in annual terms in April, accelerating from March’s subdued 1.2% growth rate—which had marked the lowest reading in almost one year.