The European Commission expect Romania’s economy to grow by 5.7% this year and 4.4% next year, according to the autumn forecast.

In spring, the EC expected a 4.3% advance in Romania’s GDP for this year, and 3.7% for next year.

“Real GDP growth accelerated in 2017, driven mainly by private consumption. Looking ahead, growth is set to decelerate but remain above potential,” reads the EC’s forecast report on Romania.

“Unemployment fell to its lowest levels in more than twenty years in 2017 and is expected to remain low over the forecast horizon. Inflation has turned positive and is set to further pick up as the output gap widens. The budget deficit is projected to increase due to public wage increases projected in the unified wage law,” the report also states.

The EC also warns of the risks that may prevent Romania from reaching the growth forecast, which include a possible tightening of the central bank’s monetary policy in response to emerging inflation, further cuts in public investment, and the continuing increase in labor costs due to wage growth outpacing productivity growth.

“More generally, uncertainty regarding the government’s policies could also hamper growth.”

The government’s expansionary fiscal policies may also lead to higher budget deficits in the next years. The EC expects the general budget deficit to reach 3.9% of the GDP next year, up from 3% this year.

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Romania’s Prognosis Commission forecasts 5.5% growth for next year

editor@romania-insider.com