Romania's National Commission for Strategy and Prognosis (CNP), under its latest forecast issued on November 18, projects a robust 4.5% GDP growth next year that would fully offset the 4.2% decline this year.

In absolute values, Romania's GDP will hit RON 1.14 billion (EUR 232 bln) next year, up from RON 1.05 bln (EUR 217 bln) this year.

The average consumer price inflation should ease to 2.3% next year from 2.7% in 2020 and 3.3% in 2019 - although the GDP deflator is expected to stay flat at 3.4% in 2020-2021.

The CNP expects private consumption to recover from the real 3.7% contraction this year to a robust 4.6% advance next year, on assumptions that the real wages will rise by another 4.4% in 2021 after the significant 4.0% advance this year while the employment will rebound by 1.7% after the slight 1.4% contraction in 2020.

CNP also shows optimism when estimating an average exchange rate of RON 4.9 to EUR next year, only slightly up from RON 4.84 to EUR in 2020.

The demand-driven recovery will further push up the trade deficit, seen as expanding by more than 10% in 2021 to over EUR 21.3 bln or 9.2% of GDP, from 7.7% of GDP in 2019.

The EU funds are probably behind the more optimistic projection for the current account gap seen by CNP at 4.5% of GDP next year, down from 4.6% of GDP this year and 4.7% of GDP in 2019. 

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iulian@romania-insider.com