Romania is among the Fastest Growing European Economies
Romania's GDP will grow by 2.5% this year (from +4.5% in 2022), according to the latest forecast published by the European Commission (EC) on 13 February. This is by 0.7 pp. more than the previous round of EC forecasts and not far from the official growth of 2.8% predicted in the scenario used by the government to plan the budget - which makes the country the third fastest growing economy in the Union after Ireland and Malta.
The implementation of the Recovery and Resilience Plan (RSP) should contribute to large investments, the EC explains, pointing out that this is expected to be the main driver of growth. It is planned that the investments will be supported by other EU funds, Romania Insider reported.
Private consumption, although negatively affected by high inflation, is expected to grow thanks to increases in the minimum wage, pensions and public sector wages, as well as the extension of the energy price cap until 2025.
Net exports are expected to remain negative due to a strong currency and weak demand in export markets.
Inflation is expected to continue to decline over the forecast period, but only modestly, as inflationary pressures remain very high in core components such as services, non-energy manufactured goods and processed foods. Average annual inflation is projected to be 9.7% in 2023, before slowing to 5.5% in 2024 due to the extension of the energy price cap, lower commodity prices and the of base effects.
But the gap between the EC and national forecasts becomes more visible when it comes to next year, when the EC expects the Romanian economy to advance by just 3.0% - still the third highest performance in the Union, but with a significant margin of compared to the national government's projected rate of 4.8%.
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