Romania's economy will increase by nearly 5% this year, but the economic activity is slowing down as the market accommodates higher energy costs and shrinking private consumption, according to the OTP Bank group.

Next year's economic growth will drop to 2.5%, according to the forecast of the Hungarian financial group, Ziarul Financiar reported.

The economic performance in the second half of the year is being impacted by the decline in the agricultural sector and the reduction in consumer spending, with more visible effects in the following year.

"We estimate a growth of 2.5% for 2023, with the slowdown being driven by household consumption. We should also take into account a weaker export performance, the fact that industry and all large industrial energy consumers will have reduced activity, and the annual performance in the service sector is reduced".

OTP Bank group analysts place the developments in the context of the eurozone heading towards stagflation or even recession.

andrei@romania-insider.com

(Photo source: OTP Bank)