Romania Economic Forecast

Romania Economic Outlook

January 14, 2020

Activity likely remained subdued in Q4 2019, after growth slowed to an over five-year low in Q3 as both the industrial and external sectors felt the pinch of protracted weakness in the EU. Industrial production contracted at a sharper pace in October, showing the industrial sector was not yet out of the doldrums. However, retail sales expanded solidly in October-November, supported by a tight labor market. On the political scene, on 10 January, Prime Minister Ludovic Orban announced he reached an agreement with President Klaus Iohannis to organize procedures to hold snap elections. A working group was set up to secure support from Parliament and determine the date of the elections, which look set to be held as closely as possible to local elections due in May-June. Moreover, in mid-December, the government approved the 2020 budget, which targets a fiscal deficit of 3.6% of GDP, well above the EU’s 3.0% limit.

Romania Economic Growth

Growth is set to cool this year. Softening wage growth should weigh on consumer spending, while political uncertainty and a volatile external backdrop are expected to restrain investment activity. The country’s fragile fiscal and external positions skew risks to the downside. Our analysts see growth at 3.2% in 2020, which is up 0.1 percentage points from last month’s forecast, and 2.8% in 2021.

Romania Economy Data

2014 2015 2016 2017 2018
Population (million)20.020.019.919.819.6
GDP per capita (EUR)7,1977,5398,0748,6329,532
GDP (EUR bn)144150160171187
Economic Growth (GDP, annual variation in %)3.53.43.94.87.0
Consumption (annual variation in %)1.94.25.88.410.0
Investment (annual variation in %)-5.83.37.20.03.3
Industrial Production (annual variation in %)7.96.22.81.87.8
Retail Sales (annual variation in %)0.56.49.512.410.8
Unemployment Rate7.16.86.85.94.9
Fiscal Balance (% of GDP)-2.2-1.3-0.7-2.7-2.7
Public Debt (% of GDP)37.639.237.837.335.2
Money (annual variation in %)8.88.49.49.811.5
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 %)-  -  -  -  -  
Policy Interest Rate (%)4.002.751.751.751.75
Stock Market (annual variation in %)26.19.1-1.11.29.4
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)-1.1-0.6-1.2-2.0-3.4
Current Account Balance (EUR bn)-1.5-1.0-2.0-3.6-6.0
Trade Balance (EUR billion)-5.8-6.6-7.8-9.3-12.2
Exports (EUR billion)43.946.849.152.257.2
Imports (EUR billion)49.753.456.961.569.4
Exports (annual variation in %)10.06.64.96.39.6
Imports (annual variation in %)1.07.46.68.112.8
International Reserves (EUR)32.532.232.234.233.5
External Debt (% of GDP)68.163.057.454.552.0

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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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