Ionut Dumitru, Raiffeisen Bank: We expect Romania’s economy to grow by 4 percent of GDP this year

Newsroom 08/02/2016 | 19:35

The chief economist of Raiffeisen Bank, Ionut Dumitru, said the growth of the Romania’s economy will accelerate this year to 4 percent of GDP, mainly due to higher domestic consumption as more people will have more disposable income.

“There is a strong support for consumption coming from disposable income”, said the economist Monday, during the seventh German & Austrian Investors Forum, organized by Business Review magazine.

Dumitru pointed out that the consumer sentiment has reached the pre-crisis levels from 2007, explaining that for instance, sales of durable goods are “skyrocketing”. However, he warned that the composition of economic growth will pose problems on the medium and long term.

The Raiffeisen Bank economist has warned that the budget deficit will continue to widen through to 2017 due to the hike of wages in the public sector by an average of 20 percent this year and the increase of military spending next year. The bank sees the budget deficit at around 3 percent this year and close to 4 percent of GDP in 2017.

On inflation, the economist said it should reach a negative 3 percent in the coming months, and should climb back to 2.8 – 3 percent at the end of next year. Dumitru said that at this moment, more than 50 percent of the CPI basket is with 9 percent VAT.

On lending, the economist said there was higher demand coming from SMEs in the past few quarters, while large corporate sectors are still dealing with the underutilization of capacities.

Ovidiu Posirca

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