World Bank forecasts lower GDP growth in Romania on weakening domestic demand, shrinking working-age population

Sorin Melenciuc 05/06/2019 | 12:15

The economic growth in Romania will slow down below 4 percent in Romania in 2019 and in the next two years due to weakening domestic demand, challenging external factors and shrinking working-age population, according to “Global Economic Prospects” report released by the World Bank.

World Bank’s experts estimate a GDP growth rate of 3.6 percent in Romania this year, compared to 4.1 percent in 2018. In the next couple of years, GDP growth rates in Romania will slow down to 3.3 percent in 2020 and 3.1 percent in 2021, according to the report, slightly above the previous forecasts.

“Fiscal stimulus, and the resulting boost to private consumption, will begin to fade in some of the subregion’s largest economies by 2020 (Hungary, Poland, Romania),” the report says.

“Shrinking working-age populations, partly reflecting emigration to western Europe in recent years, limits medium-term growth prospects in Central Europe. Tepid private investment growth could weaken further in the absence of sustained progress on structural reforms,” World Bank experts warn.

The report indicates that fiscal policy has also loosened in 2019, resulting in widening government deficit to-GDP ratios in Belarus, Kyrgyz Republic, Poland, and Romania.

“Activity in Central Europe also slowed toward the end of 2018, reflecting weakening domestic demand and challenging external factors amid a slowdown in the Euro Area (Poland, Romania),” the report says.

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