Romania Economic Outlook
A flash estimate revealed that annual economic growth slowed to 0.2% in the third quarter from 1.0% in the second quarter. Although a complete breakdown is not yet available, data suggests that another sizable contraction in the industrial sector and falling external demand were behind the slowdown. Merchandise exports decreased heavily in year-on-year terms in Q3, swinging from Q2’s increase. On top of this, inflation cooled but proved more stubborn than expected, likely weighing on consumer spending. Turning to Q4, our panel expects year-on-year growth to accelerate. Economic sentiment strengthened in October amid broad-based improvements across production sectors, and in the same month, inflation fell further, which should be supporting spending.
Inflation fell to 8.1% in October from 8.8% in September—the lowest level since November 2021. Softer price pressures for both food and non-food products offset sharper price increases for services. Inflation will continue to moderate in 2024 due to the lagged effects of prior monetary tightening. A stronger-than-expected fiscal deficit poses an upside risk.