The European Commission (EC) significantly reduced its growth forecast for Romania’s economy for 2014 and 2015, after lower than expected GDP growth in the first half of this year, according to the commission’s autumn forecast, published on November 4.

The European Commission cut Romania’s GDP growth forecast for 2014 to 2%, from 2.5% in the spring forecast and also lowered the growth estimate for 2015 from 2.6% to 2.4%.

The drop in investments dragged down economic growth, according to the EC document. “The pace of real GDP growth slowed down from 3.5% in 2013 to 2.4% y-o-y in the first half of 2014, largely due to a strong deceleration in the second quarter (1.2% y-o-y). Private consumption and net exports were the main drivers of growth while investments continued to contribute negatively (gross fixed capital formation dropped by 11.1% y-o-y in the first half of 2014). As a result, GDP growth in 2014 is projected at 2.0%.”

“In the second half of 2014, improved confidence and higher real disposable income are expected to support consumption. Investment growth is projected to regain momentum, sustained by both private and public investments,” the same document states.

The preliminary date on Romania’s GDP evolution in the third quarter of 2014, which will be published by the National Statistics Institute (INS) on Friday, November 14, will show if economic growth is recovering or not.

editor@romania-insider.com