EBRD raises forecast for Romania's 2019 economic growth to 4%

Growth is expected to slow down to 3.2% in 2020 because of higher perceived investment risks and growing external imbalances, the EBRD said in its November 2019 Regional Economic Prospects report.

The bank's forecast for Romania's 2020 economic growth remains unchanged compared to the May prediction.

"Key risks to the outlook are linked to weakness in major trading partners, not least the eurozone, rising labour shortages, domestic political and reform uncertainty," the bank said.

EBRD warned that Romania's nominal budget deficit is expected to exceed the 3% threshold in 2019.

The country's consolidated budget was in deficit equivalent to 2.6% of the projected 2019 gross domestic product (GDP) in the nine months through September, compared to a gap of 1.77% of GDP a year earlier, latest finance ministry data shows.

On the positive side, EBRD noted that Romania's general government debt is still low by regional standards, at around 35% of GDP.

The EBRD's 2019 GDP growth forecast is lower that the 5.5% increase expected by the Romanian finance ministry.

Last month, the International Monetary Fund also projected a 4.0% GDP growth rate for Romania in 2019.

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

GDP growth in the region of Southeast Europe is seen decelerating from 3.3% in 2019 to 3.0% in 2020, but still remaining above the forecast average growth of all EBRD regions, of 2.4% and 2.9% in 2019 and 2020, respectively.

The Southeast Europe region in the EBRD's report comprises Bulgaria, Cyprus, Greece, Romania, Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia.

(1 euro=4.7540 euro)