EC improves its forecasts for Romania and the Eurozone

Newsroom 25/02/2014 | 18:10

The European Union upgraded its economic forecasts Tuesday, betting that a modest recovery is now sustainable as member states push ahead with reforms.

Romania’s economy is likely to expand at an annualized pace of 2.3% in 2014 and to accelerate to 2.5% in 2015, largely fueled by domestic consumption and investments, according to European Commission’s estimates.

“In 2013, the 3.5 percent economic growth was sustained primarily through export and a rich harvest. A gradual rebalacing of the growth is expected in 2014 and 2015 based on internal demand, with a real advance of 2 percent GDP. Annual average inflation is estimated to slow down to 2.4 percent in 2014, while unemployment is expected to drop in 2015. Fiscal adjustment will continue”, according to the winter economic prognosis presented on Tuesday by the European Commission.

The European Commission said it expected the 18-nation eurozone to grow 1.2 percent this year and 1.8 percent in 2015, up from previous estimates given in November for 1.1 percent and 1.7 percent, respectively.

“Recovery is gaining ground in Europe, following the return to growth in the middle of last year. The strengthening of domestic demand this year should help us to achieve more balanced and sustainable growth. Rebalancing of the European economy has been progressing and external competitiveness is improving, particularly in the most vulnerable countries”, said Olli Rehn, Commission Vice President for Economic and Monetary Affairs.

By contrast, the Commission now expects deeper contractions in Cyprus and Slovenia. Across the EU, growth was also upgraded marginally, from a forecast of zero growth to 0.1pc this year – rising to 1.5pc in 2015.

“The worst of the crisis may now be behind us, but this is not an invitation to be complacent, as the recovery is still modest. To make the recovery stronger and create more jobs, we need to stay the course of economic reform,” said Mr Rehn, quoted by Telegraph.

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