In its latest CEE Quarterly Report, UniCredit says Romania’s economy is expected to grow by 3% in 2023 and 4% in 2024, outpacing Central Europe this year due to more resilient consumer demand, public investment and pre-election spending.

The bank also predicts moderate fiscal consolidation and somehow more impressive CA deficit narrowing despite the “deepening RON overvaluation.” 

The bank expects the government will try to unlock more Resilience Facility funds by taxing special pensions, reforming public pay and improving governance at state-owned enterprises.

UniCredit forecasts inflation at 7.3% y/y at the end of 2023 and 5.9% y/y at the end of 2024, with the monetary policy rate being cut to 5% next year.

The budget deficit is likely to narrow moderately to 5.2% of GDP this year and 4.7% of GDP in 2024, according to the bank’s projection – which puts the fiscal consolidation far from the excessive Deficit Procedure desired path.

The C/A deficit – seen by UniCredit at only 6% of GDP this year and 5% of GDP in 2024 – will be fully covered by FDI, EU funds and Eurobond issuance.

iulian@romania-insider.com

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