The high economic growth expected in Romania this year is largely due to fiscal stimulus and the country’s macroeconomic indicators will worsen next year, according to a report by the International Monetary Fund (IMF).

“Growth is expected to reach 4.2% in 2016—largely due to the one-off stimulus to consumption from the recent fiscal expansion—and decelerate to 3.6% in 2017. Underlying inflation is expected to continue growing and the current account deficit to widen further because of import growth,” the IMF report shows.

The Romanian economy is on a cyclical upswing supported by strong domestic demand. Recent hikes in minimum and public wages, record low interest rates, low fuel prices, and a Value-Added Tax (VAT) reduction have boosted private consumption, according to IMF.

The main internal factor that may endanger Romania’s economic growth consists of populist measures, in an election year.

The full IMF report on Romania is available here.

IMF: Romania has a gross funding need of EUR 15.8 bln

editor@romania-insider.com