Economic growth estimates for 2022 go down

The National Commission for Strategy and Prognosis has revised down Romanias economic growth for this year to 4.3%

Corina Cristea, 17.02.2022, 13:50

The National Commission for Strategy and Prognosis in
Bucharest has revised down its economic growth forecast for this year to only
4.3%, 0.3% down as compared to its previous estimate. The forecast is mainly
based on the growing inflation rate, presently at 8% and expected to hit two-digit
figures shortly, but also takes into account the fifth wave of the Coronavirus
pandemic and the energy crisis.

Authors of the aforementioned forecast have explained that all the estimates
have been done without taking into account a potential conflict caused by the
geopolitical tensions at the border with Ukraine.

The 4.3% growth has been done in keeping with the higher
energy prices, which may hamper activity especially in the chemical and steel
industry, known to be major energy consumers.

At the same time, dysfunctional supply chains, which
contribute to price hikes on the market, are believed to continue. Even if such
dysfunctionalities are diminished, they will continue to affect the car and
electric equipment manufacture.

Services are expected to register a low increase, especially
in the household sector, whereas constructions are to see a more significant
development than estimated in autumn. Growth in this sector is expected to become
visible against the same period last year, when activity slowed down but also
because of an envisaged impetus given by the incoming European funds.

The Commission has also forecast lower growth in private
consumption and investment against the previous estimates. Research has also been
made on the impact of the energy price hike upon the inflation rate, which translates
into higher consumer prices.

This increase is to be felt less in February thanks to the
new regulations aimed at capping these prices, but is to gain momentum in
April.

Slight
increases are also expected in July and at the beginning of the cold season.
Estimates point to an inflation rate of 9.5% at the end of the year within the annual
average of 9.9%. The estimates don’t take into account other protection measures
for the population though. Suchlike measures are to be quantified in the commission’s
further forecasts.

According
to data released on Tuesday by the National Institute for Statistics, Romania saw
a 5.6% economic growth last year whereas its GDP dropped 0.5% in the last
quarter of 2021 as compared to the previous quarter, but rose 2.2% against the
same period of 2020.

(bill)