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EU Commission increases Romania's GDP growth forecasts for 2019, 2020

EU Commission increases Romania's GDP growth forecasts for 2019, 2020 Romania GDP, budget

BUCHAREST (Romania), July 10 (SeeNews) - Romania’s economy is expected to expand by a real 4.0% in 2019, the European Commission said on Wednesday, increasing its previous projection of 3.3% made in May. 

For 2020, the Commission predicts Romania's gross domestic product (GDP) growth of 3.7%, up from 3.1% projected in May, the Commission said in its Summer 2019 Economic Forecast report.

The strong growth of real GDP in the first quarter led to an upward revision of growth for the whole year, the Commission said.

"However, the composition of growth is expected to become somewhat more balanced as total investment strengthens with a pick-up in private investment. Tight labour market conditions are expected to continue over the forecast horizon, with unemployment remaining close to its current, very low level. Wage growth is forecast to moderate to single digits in 2020, led by the expected slowdown in public wage growth," the Commission explained.

It also noted that following an annual increase of 4.1% in 2018, real GDP growth accelerated in the first quarter of 2019 to 5.1% year-on-year, with pivate consumption being the main driver. Investment picked up, thanks mainly to a recovery in construction, spurred by recent fiscal stimulus. Export growth, by contrast, weakened to 3.2% year-on-year, while import growth climbed to 9.3%.

Romania's economy expanded by 4.1% year-on-year in 2018, compared to a growth rate of 7% in 2017, data from the country's statistical board showed

Annual consumer price growth remained strong in the first quarter of 2019, at 3.8%, and is expected to exceed 4% in the second quarter, before decelerating again, the EC also said.

Rising unprocessed and processed food prices explain the strong upward price dynamics boosted by a depreciation of the currency at the beginning of the year and strong consumption and wage growth. As a result, annual headline inflation is expected to average 4.2% in 2019, before decelerating to 3.7% in 2020, the EC said.

Romania's consumer prices rose by 3.84% year-on-year in June, compared to a 4.1% growth recorded in the previous month, the national statistical office, INS, said.

(1 euro=4.7337 lei)