The World Bank under its “Europe and Central Asia Economic Update” report on April 5 revised marginally upward its estimates for Romania’s economic growth to 3.6% this year and 3.3% in 2020, from 3.5% and 3.1% respectively projected in January.

Even under the revised forecast, Romania’s economy would slow down significantly from 4.1% in 2018 and 7.1% in 2017.

The causes for the slowdown are both internal (mainly stemming from the fiscal policy) and external. The World Bank believes that the fiscal measures promoted at end-December 2018 risk slowing the economy further in 2019 and beyond. The fiscal measures adopted in 2017 and 2018 also put pressure on the consolidated budget deficit and reduce the Government's investment resources.

Plans to increase pensions and wages in the public sector will increase these pressures, the WB expects. Moreover, the slowdown in some of Romania's traditional export markets, mainly Germany and Italy, in line with commodity price increases, could lead to a rise in the current account deficit and could affect investments.

editor@romania-insider.com

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