IMF forecasts for Romania

The IMF estimates that Romanias economy will grow faster than previously estimated.

Daniela Budu, 18.04.2018, 13:44

According to the latest World Economic Outlook,
the International Monetary Fund has revised its forecast concerning the growth
of the Romanian economy up from 4.4% to 5.1%, which means Romania is expected
to have the second-highest growth rate in Europe this year. The IMF has also
revised up to nearly 5% its inflation rate forecast, one percentage point
higher than the estimates of last October. The report also says that consumer
prices are expected to grow at a slower pace next year, when the IMF expects a
slackening in the GDP increase of up to 3.5%. The Fund has also revised its
forecast on the current account deficit in Romania up by nearly one percentage
point compared with previous estimates. This year and the next, the
unemployment rate is estimated to stand at 4.6%.

In another development, a Deloitte Romania
survey warns that fiscal instability is the biggest threat to business. That is
the reason why financial managers in Romania say they focus more on
consolidating their companies rather than on expanding them. The survey looks
at various aspects such economic prospects, the business environment, financial
forecasts and digitalisation. Most financial managers foresee that, although
economic growth will continue, the inflation rate and financing costs will also
go up. Almost 60% of managers in Romania believe that
fiscal instability is the main threat to business and so they are willing to
take fewer chances. Zeno Caprariu, a manager with Deloitte Romania, explains:

Investors are still content with Romania
because if they hadn’t been, they would have left. However, as the survey
shows, they have reservations about the future. This is an alarm signal because
these reservations may later lead to their leaving the country, cutting down on
their activity or relocating it. A clearer fiscal and more substantial
environment with fewer taxes is desirable.

Overall, Europe will this year see a 2.7%
economic growth rate, while emerging Europe, which also includes Romania,
will see a 4.3% increase in the GDP in 2018, as the IMF estimates in its World
Economic Outlook.