EBRD upholds Romania's 2024 GDP growth f'cast at 3.2%

"After a poor 2023, industrial production started recovering, with car production growing by 7 per cent year on year in the first quarter of this year," the EBRD said in its May 2024 Regional Economic Prospects report. "For the first time since 2016, net exports made a small positive contribution to growth."

The EBRD stressed that Romania's main vulnerability is its fiscal position, with fiscal deficit increasing to 5.9% of gross domestic product (GDP) last year. Moreover, while increased public spending due to public wage and pension hikes supports consumption, it also risks leading to an even wider gap in 2024.

In 2025, Romania's GDP growth is expected to accelerate to 3.4% thanks to moderating inflation and easing financial conditions.

"Painful fiscal consolidation from 2025 onwards and potential market pressures represent key downside risks to growth in the medium term," the EBRD noted.

The lender also said it revised upwards its estimate for Romania's GDP growth in 2023 to 2.1%, among the highest growth rates in the region, adding 0.3 percentage points (pp) over its September forecast.

In the EBRD's region of Southeastern EU where Romania belongs, the bank forecasts that GDP growth will pick up to 2.8% in 2024, from 2% recorded last year, backed by accommodative fiscal policies and strong real wage growth. In 2025, the region's economic growth is projected to accelerate to 3.1%, thanks to positive investment trends and the availability of substantial EU funds.

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