RRI Live!

Listen to Radio Romania International Live

Downward forecast from the European Commission

The growth of Romania's economy will not be even half of what was estimated in 2024, and the deficit will reach 8% of the GDP, warns the European Commission.

Photo: Mediamodifier / pixabay.com
Photo: Mediamodifier / pixabay.com

, 18.11.2024, 14:00

Romania’s economic growth estimate has been recalculated by the European Commission (EC), at a value well below the initially established figure. In the forecast published in the spring of 2024, the estimate was that the economy would register an advance of 3.3% this year, followed by one of 3.1% in 2025. In a recent document, however, the EC states that the growth rate of the Romanian economy will slow down to 1.4% this year, then accelerate slightly to 2.5% in 2025. During this year, industrial production, constructions, IT and transports have slowed down due to the decrease in external demand from Romania’s main trading partners, the rapid increase in wages and the high energy prices. At the same time, retail sales have grown strongly as available incomes have grown at a rapid pace. However, the dynamic private consumption was largely counteracted by the negative contribution of exports to the GDP growth, while the growth of private investments was moderated by the uncertainty surrounding the expected fiscal consolidation measures, the EC stated.

 

On the other hand, according to the new forecasts, Romania’s budget deficit is forecast to reach 8% of the GDP in 2024 and to remain at a high level of 7.9% of the GDP in 2025. Comparatively, in the spring, Brussels estimated that the deficit was expected to reach 6.9% of the GDP in 2024 and 7% of the GDP in 2025. According to the EC, the deficit exceeding the expectations reflects a very rapid increase in government spending, mainly due to increases in public sector wages, to spending on goods and services, and social transfers, including pensions. It also reflects a slightly slower revenue growth due to weaker than expected economic activity. The good news is that inflation is expected to continue to decline in Romania, from an average of 10% in 2023, to around 5.5% in 2024. However, pressures on prices remain high, due to strong domestic demand, on the backdrop of increasing salaries and pensions, warns the EC.

 

Despite the economic slowdown, the demand for jobs remains strong, and the unemployment rate will be 5.5% in 2024 and 2025 and 5.4% in 2026. At the same time, public debt is expected to increase from 48.9% of the GDP in 2023 to almost 60% by 2026. The forecast does not include any impact of the government’s potential budget deficit reduction measures on revenues or expenditures, measures included in the medium-term fiscal and structural plan that Romania presented to the EC in October. These measures are not sufficiently specified by the government at this stage, the report points out. However, they have the potential to significantly reduce the public deficit in relation to this forecast, if they are designed and implemented properly in the budget for 2025. In its latest report, the IMF also revised downwards to 1.9% the estimates regarding the advance of the Romanian economy this year, from 2.8% as forecast in April. (LS)

Mircea Fechet (Photo: gov.ro)
Today in the News Friday, 25 April 2025

The Environment Fund Administration gets record budget

The Environment Fund Administration this year received from the government a record budget for investments, worth over 3.2 billion euros. The money...

The Environment Fund Administration gets record budget
Minister of Education and research, Daniel David
Today in the News Friday, 25 April 2025

Measures for the Romanian education

During Thursday’s meeting, the Romanian government discussed several laws related to education. They established the legal framework for...

Measures for the Romanian education
Photo: pixabay.com
Today in the News Thursday, 24 April 2025

A new law on the magistrates’ pensions

There are several occupational categories in Romania whose employees are usually retiring under the age of 50 and whose pensions aren’t exclusively...

A new law on the magistrates’ pensions
Foto: Mediamodifier / pixabay.com
Today in the News Thursday, 24 April 2025

Downward forecast revision from the World Bank

According to its latest report, the World Bank expects growth in developing economies in Europe and Central Asia to slow down to 2.5% in 2025-2026...

Downward forecast revision from the World Bank
Today in the News Wednesday, 23 April 2025

From budget deficit to governmental debt

  The Romanian finance ministry reiterates Romania’s commitment to meet the 7% of GDP deficit target at the end of the year, and promises...

From budget deficit to governmental debt
Today in the News Wednesday, 23 April 2025

Romanian – German Friendship Day

A year ago, former Romanian President Klaus Iohannis, himself an ethnic German from Transylvania, promulgated the Law establishing April 21 as...

Romanian – German Friendship Day
Today in the News Tuesday, 22 April 2025

Romania reacts to the Pope’s Death

Pope Francis passed away on Monday, the second day of Easter, after 12 years of pontificate, and the emotion caused by his disappearance crossed the...

Romania reacts to the Pope’s Death
Today in the News Thursday, 17 April 2025

Christians before Easter

The Orthodox Christians in Romania are preparing to celebrate Easter – the feast of light and joy, considered the greatest celebration of...

Christians before Easter

Partners

Muzeul Național al Țăranului Român Muzeul Național al Țăranului Român
Liga Studentilor Romani din Strainatate - LSRS Liga Studentilor Romani din Strainatate - LSRS
Modernism | The Leading Romanian Art Magazine Online Modernism | The Leading Romanian Art Magazine Online
Institului European din România Institului European din România
Institutul Francez din România – Bucureşti Institutul Francez din România – Bucureşti
Muzeul Național de Artă al României Muzeul Național de Artă al României
Le petit Journal Le petit Journal
Radio Prague International Radio Prague International
Muzeul Național de Istorie a României Muzeul Național de Istorie a României
ARCUB ARCUB
Radio Canada International Radio Canada International
Muzeul Național al Satului „Dimitrie Gusti” Muzeul Național al Satului „Dimitrie Gusti”
SWI swissinfo.ch SWI swissinfo.ch
UBB Radio ONLINE UBB Radio ONLINE
Strona główna - English Section - polskieradio.pl Strona główna - English Section - polskieradio.pl
creart - Centrul de Creație Artă și Tradiție al Municipiului Bucuresti creart - Centrul de Creație Artă și Tradiție al Municipiului Bucuresti
italradio italradio
Institutul Confucius Institutul Confucius
BUCPRESS - știri din Cernăuți BUCPRESS - știri din Cernăuți

Affiliates

Euranet Plus Euranet Plus
AIB | the trade association for international broadcasters AIB | the trade association for international broadcasters
Digital Radio Mondiale Digital Radio Mondiale
News and current affairs from Germany and around the world News and current affairs from Germany and around the world
Comunità radiotelevisiva italofona Comunità radiotelevisiva italofona

Providers

RADIOCOM RADIOCOM
Zeno Media - The Everything Audio Company Zeno Media - The Everything Audio Company