The European Commission has upgraded its growth forecast for the Romanian economy to 2.7 percent for 2015, up from 2.5 percent it forecast in November last year, according to a EC report which was made public on Thursday.
“Economic growth in Romania is forecast to stay above potential, at 2.7 percent in 2015 and 2.9 percent in 2016, powered by domestic demand and also supported by the gradual recovery expected in the global economy. Private consumption is expected to remain robust, as growing wages, low inflation, falling interest rates and improving labor market conditions are all supportive for the purchasing power of households,” reads the EC report.
The Romanian economy is estimated by the EC to have expanded by 3 percent in 2014. This was mainly the result of “better than-expected private consumption and exports” while overall “confidence indicators are back to pre-crisis levels, pointing to continued momentum for the economy”. Investments continued to drop in 2014, albeit the contraction is believed to have narrowed.
By comparison, the EU economy posted a sluggish recovery in 2014 with annual GDP expected to have increased by 1.3 percent (and 0.8 percent in the euro area). However, the outlook for 2015 and 2016 is more positive. “Oil prices have declined sharply, the euro has depreciated noticeably, the ECB has decided to expand the size and composition of its outright asset purchases by adding sovereign bond purchases, and the European Commission has presented its Investment Plan,” reads the report. All this should lead toan annual GDP growth in the EU of 1.7 percent this year and 2.1 percent next year, while growth in the euro area is expected to pick up to 1.3 percent in 2015 and 1.9 percent in 2016.