IMF improves Romania’s growth outlook to 4.2 pct of GDP this year, above emerging Europe average

The IMF expects the Romanian economy to increase 4.2 percent of GDP in 2016, according to its latest World Economic Outlook.

Last October, the financial institution had forecasted a 3.9 percent expansion of the local economy this year.

Next year, the local economy is set to slow down to 3.6 percent, but in line with grow rates registered by Ireland, Latvia and Poland.

Overall, Romania is set to beat this year the average growth rate in emerging Europe, which stands at 3.5 percent.

On consumer prices, the IMF expects a negative rate of 0.4 percent, with Romania set to be among the EU member states with negative inflation.

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In 2017, however, the IMF estimates a sharp increase of 3.1 percent of consumer prices in Romania.

The current account deficit is set to reach a negative 1.7 percent this year, further expanding to a negative 2.5 percent next year.

According to the report, the unemployment rate in Romania will fall from 6.8 percent in 2015 to 6.4 percent this year. It should further decease to 6.2 percent in 2017.

The overall growth estimate for Europe’s economy stands at 2 percent, while the global economy will gain 3.2 percent, down 0.4 percent from the October forecast.

In a separate analysis, the World Bank expect Romania to grow by 4 percent this year, but warns that the country might return to the excessive deficit procedure.

Analysts say that the combination of growing wages in the public sector and fiscal relaxation will boost domestic consumption, but will generate economic growth that will not be sustainable without key investments in infrastructure, for instance.

Ovidiu Posirca