Romania's economic growth will slow down to 3.6% this year from 4.6% in 2016, according to financial consultancy firm Coface. It will be one of the few countries in the region that will face such a slowdown.

The country’s budget deficit will increase to 3.5 % of the GDP this year from 2.6% last year, said Eugen Anicescu, Coface Romania country manager, reports local Economica.net.

In 2016, the economic growth was supported by very strong stimuli that boosted consumption, including the VAT rate drop from 24% to 20%. Salaries also increased both in the private and the public sector last year. This year the stimuli won’t have the same impact, Anicescu explained.

Based on the draft budget the authorities recently presented, the adopted social measures will have an impact of RON 5.7 billion (EUR 1.2 billion). As for revenues, the tax reductions, although offset by the increase in the minimum wage, will generate a minus of RON 3 billion (EUR 661 million). This will lead to a deficit of 3.5% of the GDP this year, the Coface Romania country manager also said.

Romania’s National Prognosis Commission ups economic growth forecast

Romanian Presidency disagrees with Government on economic growth

editor@romania-insider.com