May 12 (SeeNews) - The European Commission said on Wednesday that Romania’s economy is expected to expand by a real 5.1% in 2021, as compared to 3.8% growth projected in February.
The growth of Romania's gross domestic product (GDP) in 2022 is forecast at 4.9%, higher than the increase of 4% in the winter projection, the Commission said in its Spring 2021 Economic Forecast report.
"After a milder-than-anticipated decline in 2020, Romania’s economy is set to recover from the COVID-19 crisis and return to pre-crisis levels of economic activity before the end of 2021. Nevertheless, uncertainty remains high given the unpredictable evolution of the pandemic and possible disruptions in the supply of vaccines," the Commission added.
Private consumption is expected to recover as the vaccination roll-out progresses and social distancing measures are gradually lifted, exports are expected to rebound in 2021, supported by the gradual recovery of global trade, while higher consumer spending should spur import growth, according to the report.
Risks to the growth forecast are broadly balanced, according to the Commission.
"On the one hand, confidence effects and a better than expected progress of projects financed under the Recovery and Resilience Plan (RRP) could provide an extra boost to domestic demand. However, delays in the implementation of the RRP could result in a more muted recovery. The forecast follows the authorities’ backloaded projection on the plan’s implementation, according to which only a limited amount of the grant allocation will be used in 2021 and 2022."
The general government deficit is forecast to fall to around 8% of GDP in 2021, from 9.2% of GDP in 2020, mainly due to a suspension of new increases in pensions and public wages, additional cuts to some bonuses and other expenditure, and the partial withdrawal of emergency measures. As the economic recovery continues in 2022, and crisis-related measures are discontinued the budget deficit is expected to fall further, to 7.1% of GDP.