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Tag: estimates

  • The EBRD improves estimates for Romania

    The EBRD improves estimates for Romania

    Romanias economy evolved in the first half of the year much better than expected. This is confirmed by the latest EBRD report, which shows that after a 5.9% rebound in 2021, boosted by private consumption, the GDP registered a surprising growth of 5.8% in the first months of 2022. The international financial institution says that all private consumption, especially of services, was the trigger of growth this time as well, being stimulated by the removal of restrictions related to the pandemic. The GDP growth for the whole of 2022 is estimated somewhere at 5.4% and follows the trend recently indicated also by the assessment mission carried out by the IMF in Romania. The IMF estimated a growth rate of the Romanian economy of 4.8%, higher by more than 2%.



    Things will look completely different next year, though, the European Bank for Reconstruction and Development officials believe. For 2023, the bank estimates an economic growth rate of only 1.9%, which was itself revised upwards from the May estimate. The spring estimates showed that Romanias Gross Domestic Product was to report an increase of 2.9% in 2022 and a contraction of 1.1% in 2023. The EBRD puts the blame for the modest growth forecast for next year mainly on the deterioration of household incomes and on financing and energy costs, which constrain investments. Adding to this is the weak external demand, particularly from Germany, the EBRD report shows.



    At the same time, financial experts even warn that there are still risks of a decline in Romanias economy, in the event of a more serious recession than expected in the euro zone. The EBRD shows that in all three EU member states in Southeastern Europe – Romania, Bulgaria and Greece – which recorded solid economic growth in the first half of 2022, signs of a significant slowdown are beginning to emerge. Inflation has reached two-digit figures, and uncertainty about energy supplies in the coming months is affecting confidence and investment.



    The international financial institution estimates that economies in its region of activity will register growth of 2.3% in 2022, above its May forecasts, thanks to solid activity in the first half of the year, when households spent the savings accumulated during the pandemic quarantines, despite a decline in real wages. However, the reduction in Russian gas supplies led the EBRD to reduce its growth forecasts for next year to 3%, from 4.7% as previously estimated. Ukraines GDP is estimated to contract by almost one third in 2022, while Russias economy is expected to shrink by 5%, instead of the 10% as the EBRD had previously estimated. (LS)

  • April 11, 2022 UPDATE

    April 11, 2022 UPDATE

    Aid – The leaders of the ruling coalition in Romania are to decide the final form of the aid package for the population and the economy, in the context of the recent wave of price hikes. There are measures that have been discussed for several weeks – increasing the amounts allocated to food in hospitals, increasing the value of meal vouchers and granting vouchers to the vulnerable population. The minimum wage is also to be increased, a measure which is optional for companies though, and they might introduce the possibility of loan repayment postponement for the population, as happened during the pandemic. Carriers are also to receive support, as they will have part of the diesel costs reimbursed by the state, and grants are provided for small and medium-sized enterprises. Liberal Prime Minister Nicolae Ciuca has said the aid package will ensure the functioning of the economy and protect vulnerable citizens. In turn, the Social Democrat leader, Marcel Ciolacu, has pointed out that this is the first time that a Government comes with such an initiative, and the total amount allocated for the application of the aid package is over 17 billion lei (about 3.5 billion Euros), half of which is covered by European funds.



    WB – The World Bank has revised downwards the estimate for Romania’s economic growth this year, from 4.3%, as it estimated in January, to 1.9%. According to the international institution, the economic risks have increased significantly, especially as a result of the Russian invasion of Ukraine. For next year, the World Bank has improved its estimate of the Romania’s economic growth, to 4.1%, while for 2024 it anticipated an increase in the Gross Domestic Product of 4.3 %.



    Schengen — The Group of the Progressive Alliance of Socialists and Democrats in the European Parliament is committed to firmly supporting Romanias accession to the Schengen Area. The statement was made in Bucharest by the groups president, Iratxe García Pérez, who stated that Romania met the technical criteria for inclusion in the European free movement area. “There is no excuse for this not to become a reality as soon as possible,” Perez said. Romania should have joined Schengen in 2011, but several European countries have shown their opposition, saying that the country has problems with corruption and the justice system.



    EU accession — The Republic of Moldova and Georgia received on Monday, from the European Commissioner for Enlargement Oliver Varhelyi, the questionnaire for their application for EU accession. The document serves as a basis for accession negotiations, which, however, involve a laborious and lengthy process. The handing over of the questionnaire by the European Commission is an important stage on the European path of the Republic of Moldova, and Romania is by its side and offers its full support, Romanian President Klaus Iohannis wrote on Twitter. Prime Minister Nicolae Ciuca welcomed the event, noting that the Romanian government was ready to provide support in formulating the response.



    Sanctions — The Romanian Foreign Minister Bogdan Aurescu on Monday hailed the adoption of the new package of European sanctions against Russia (the fifth), stressing the importance of their effective implementation and expressed readiness to discuss new sanctions. He attended a meeting of EU foreign ministers in Luxembourg. As for Ukraine, Aurescu expressed concern over the growing number of reports of war crimes and crimes against humanity and underscored Romanias support for the International Criminal Courts efforts to investigate them. The Romanian Foreign Minister said that the unity and solidarity of the EU, as well as the coordination with the USA, NATO and other partners remained fundamental in counteracting the impact of the war in Ukraine.



    Visit — Romanias energy security, tougher measures against Russia, the consolidation of NATOs eastern flank and the impact of the war in Ukraine on the Romanian economy were the main topics of discussion at the meeting, in Bucharest, of the Senate Speaker Florin Citu with a delegation led by the leader of the Republican minority in the U.S. House of Representatives, Kevin McGarry. The two sides highlighted, among other things, that nuclear power projects were a priority for increasing Romanias energy security and reducing its energy dependence on Russia. The importance of the international community adopting a unified and coherent response to the actions of the Russian Federation against Ukraine was also discussed.



    Motion — On Monday, the Chamber of Deputies of the Romanian Parliament rejected a simple motion submitted by Save Romania Union – USR against the Environment Minister, Tanczos Barna. The opposition party claimed that the minister of the Democratic Union of Ethnic Hungarians in Romania – UDMR in the ruling coalition would be the main culprit for illegal deforestation, environmental damage, the states incapacity to take advantage of green economy opportunities and for the contemptuous attitude towards civil society, USR representatives say. Tanczos Barna claimed that the so-called illegal deforestation was untrue, because no one could prove one single case of illegal logging during his term. (LS)

  • Economic growth estimates for 2022 go down

    Economic growth estimates for 2022 go down

    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)



  • Highlights of the 2022 budget

    Highlights of the 2022 budget

    The draft state budget for 2022 is likely to reach Parliament and be voted on fast, before Christmas. It was launched for public debate on Sunday and aims to protect vulnerable groups, to reduce tax dodging and increase investment funds up to 7% of the GDP. According to the draft budget, in 2022 Romania will have revenues of 216 billion lei (43.8 billion Euros) and will spend 301 billion lei (61.4 billion Euros). The Finance Ministry expects sustained economic growth next year and hopes to meet the deficit target agreed upon with the European Commission. In the “Budget Allocations” chapter, the Transport Ministry will receive 20% more funds in 2022 than in 2021. The Ministry of European Investment and Projects will also have a substantially increased budget, alongside the Defense, Education and Culture ministries.



    The Presidential Administration, the Senate, the Chamber of Deputies and the Government’s General Secretariat, as well as the secret services, will have additional funds. Among the institutions that receive less money are the Ministries of Finance, Development, Energy, Entrepreneurship and Tourism and the Public Ministry. The Health Ministry will have about the same budget as this year. According to data published by the Finance Ministry, the draft budget is based on an economic growth rate of 4.6% and a budget deficit of 5.8% of the GDP which has been estimated for 2022 at about 1.300 billion lei (265 billion Euros). At the same time, the average inflation rate has been forecast at 6.5%.



    According to the budget strategy, the estimates for the next three years show an economic growth peak in 2023 of 5.3% and an average annual rate of 4.9% over the entire period 2023-2025. This is higher than the rate estimated in the EU and the Eurozone, of 4.3%, given that the economic shock caused by the pandemic is one of the most significant in recent history. Romania, however, has the advantage of a relatively rapid return of the GDP to the pre-pandemic level. The draft budget also stipulates that the worst moment of the crisis has been overcome by fiscal and monetary measures that boosted economic activity.



    However, economic developments are dependent on the evolution of the vaccination campaign, on potential future pandemic waves, the specificities of the economic structure and the external influences caused by the degree of integration into the European and world value-added and production chains. At the same time, the measures adopted by the authorities in the context of the manifest twin imbalances — of the current account and fiscal account — will also have an influence. The support measures will be gradually withdrawn to reach the assumed 3% budget deficit target by 2024. (LS)

  • August 14, 2020 UPDATE

    August 14, 2020 UPDATE

    Coronavirus Ro – The Romanian government has approved a decision on extending the state of alert by another month. The decision comes into force on August 16 and was prompted by the persistence of a high rate of contamination with the new coronaviurs across Romania as well as by the identification of new cases of infection on a daily basis. In Romania more than 68 thousand cases of contamination have been reported since the coronavirus outbreak, with almost 32 thousand patients having recovered. The Strategic Communication group has also announced that 473 patients are in intensive care. The total death toll in Romania stands at 2,904.



    GDP — Romania’s GDP has dropped by 12.3% in the 2nd quarter of this year as compared to the 1st quarter, and by 10.5% as compared to the 2nd quarter of 2019, the National Institute of Statistics informed on Friday. A drop in the GDP was also reported in the first six months of 2020, when it decreased by 3.9% as against the same period of last year. The National Commission for Strategy and Prognosis also reviewed the estimates regarding the evolution of the Romanian economy in 2020, so, at present, the Commission forecasts a contraction going up to 3.8%, as compared to 1.8% previously estimated. According to the summer economic forecasts, published by the European Commission, Romanias GDP will register a significant drop – 6%, in 2020. Also the Romanian authorities estimate a budget deficit of 8.6% of the GDP. The annual inflation rate went up to 2.8% last month from 2.6% in June. The growth was caused by the increased prices of foodstuffs, services and nonfoods.



    Navy Day — The Romanian Navy Day is traditionally celebrated on August 15, when Christians celebrate the Assumption of the Virgin Mary. This year the events have been adapted to the new context imposed by the Covid-19 pandemic. Thus, unlike in the previous years, this years edition, dedicated to the 160th anniversary of the establishment of the Romanian Naval Forces, takes place mainly online. The Naval Forces official Facebook page has already launched thematic contests and virtual projects that offer the public the opportunity to get to know the marines better. Recitals of the Military Music of the Naval Forces were also streamed online, as well virtual tours of Romanian ports. Nevertheless, on Saturday, on Navy Day, there will be ship parades on the Black Sea and the Danube. To prevent the crowding of people, access of the public will not be allowed.



    Tennis — The Romanian tennis player Simona Halep, world’s no.2 and top seed in Prague, on Friday qualified to the semifinals of the WTA tournament hosted by the Czech capital which offers total prizes worth more than 200 thousand dollars, after defeating the Polish player Magdalena Frech (174 WTA) 6-2, 6-0. Also on Friday the Romanian Irina Begu qualified to the quarter finals after defeating the Swiss Leonie Kung 7-6, 5-7, 7-6. Another Romanian player Ana Bogdan withdrew from the competition at the score 5-2 against the Czech Kristyna Pliskova who thus goes further to the semifinals. In the doubles, the Romanian players Monica Niculescu and Raluca Olaru have qualified to the semifinals and will play against the Czech pair Barbora Krejcikova and Katerina Siniakova.



    Agreement — The Romanian Foreign Ministry hails the announcement regarding the normalization of relations between Israel and the United Arab Emirates as well as the relevant role of the US that brokered the agreement. In this context, the Romanian diplomacy expressed confidence that the agreement between Israel and the UAE, two of Romania’s important regional partners, will contribute to the stability and security of the Middle East. This is the biggest progress towards peace between Israel and the Arab world in the past 26 years, being the starting point for the third agreement between Israel and an Arab nation, said the Prime Minister Benjamin Netanyahu. Israel also has peace agreements with Egypt and Jordan. The Palestinian National Authority labeled the agreement a “betrayal” of the Palestinian cause and called for an emergency meeting of the Arab League to denounce this agreement.



    MAE — The Romanian Foreign Ministry MAE has categorically rejected Russia’s criticism related intentions to consolidate the American presence in Romania. The Romanian diplomacy on Friday published a response to the recent statements made by the spokesperson for the Russian Foreign Ministry Maria Zaharova who accused NATO and the US of intending to consolidate a north-south axis from the Baltic to the Black Sea, an axis meant to discourage Russia. MAE explained that NATO’s process to consolidate security in the Black Sea region was a legitimate and legal response after the illegal annexation of Crimea and Russia’s aggressive actions on the Black Sea basin. (translation and update by L. Simion)

  • Estimates on Romania’s economy

    Estimates on Romania’s economy

    Romania’s economic vigor has started to diminish, as shown by the autumn estimates of the European Commission made public on Thursday. The EC has revised significantly downwards its estimates on Romania’s economic growth for 2018, from 4.5% to 3.6%. In 2019 the country’s economic growth rate is expected to stand at 3.8% as compared to 3.9% as forecast in spring, while for 2020, the EC estimates a growth rate of 3.6%.



    Nevertheless, the Romanian finance minister, Eugen Teodorovici, said that the Romanian Government sticks to its 5.5% estimates regarding the country’s economic growth for 2018: “The government has made certain estimates, that you may well know, and we continue to maintain those estimates, in the sense that the country will report economic growth. Taking a look back, we can see that we were right, every year the estimates made by the government proved to be correct.”



    In exchange, the Liberal opposition represented by Senator Alina Gorghiu questions the government’s forecasts. According to her, the EC forecasts show that Romania’s economy is massively slowing down due to the policies of the government coalition made up of the Social Democratic Party and the Alliance of Liberals and Democrats, and she called on the Social Democrat leader and the PM Viorica Dancila to present the reality of the Romanian economy.



    “Without manipulating the figures, a fact that will be unveiled by the European partners, the 2019 budget cannot be drafted so as to include the promises made the Social Democrats. I’m asking Liviu Dragnea, Viorica Dancila and Eugen Teodorovici to come out publicly and provide clear information about the real figures in the state budget and the Romanian economy.”



    According to the EC, Romania’s economic boom is subsiding as the private consumption rate is slowing down, and the negative contribution of net exports to growth continues to worsen. The EC also reports that, for the forecast period, the GDP is estimated to grow moderately. Private consumption remains the engine behind economic growth, the EC underlined, and the figures published on Thursday show that domestic demand will have a lower contribution to the GDP growth, of 4.2% as compared to 7.3% reported last year. The contribution of domestic demand is estimated to slightly increase at 4.3% in 2019 and to drop to 4.1% in 2020. As regards inflation, the EC revised slightly upwards, to 4.3%, its estimates for 2018 as compared to 4.2% as forecast in spring, with the consumption price index estimated to go down to 3.5% in 2019 and to 3.3% in 2020, as a result of lower domestic demand. In turn, Romania’s central bank has maintained its inflation forecast at 3.5% for the end of 2018 and increased it slightly for next year.