May 17 (SeeNews) - Garanti Bank Romania said it expects the country's economy will grow by 4.4% in 2018 - faster than the previous growth forecast.
The economic advance will likely be supported by services, industry and trade, Garanti Bank Romania, part of Turkish financial group Garanti, said in a macroeconomic report on Wednesday.
At the end of 2017, the bank said that Romania's gross domestic product (GDP) will grow by 4.0% in 2018.
The country's economic growth slowed to 4.0% year-on-year in the first quarter of 2018, compared to 5.7% annual growth in the like quarter of 2017, non-adjusted flash data of the country's statistical board, INS, indicated on Tuesday.
Romania's 2018 budget bill is built on projections of 6.1% economic growth and envisages a deficit equivalent to 2.96% of GDP.
According to Garanti Bank Romania, domestic demand continues to be stimulated by the expansive fiscal policy, and the budget deficit is seen at 3.5% in 2018.
Garanti Bank said it expects end-year inflation of 3.6% in Romania. The country's annual consumer price inflation quickened to 5.2% in April from 5.0% in March, reaching a five-year high, according to the latest data available from INS.
Regarding Romania's monetary policy, Garanti Bank said it expects to see just one more rate hike by the end of the year, to 2.75% from 2.5% at present.
On May 7, Romania's central bank increased its monetary policy rate to 2.50% from 2.25% - the third rate hike this year.
The current account deficit continues to widen but it should not catch too much speed, as consumption appetite seems to moderate and wage growth should be slower in 2018, Garanti Bank Romania said.
Romania's current account deficit rose 967 million euro ($1.15 billion) in the first three months of 2018, up 25.6% year-on-year, provisional data from the central bank showed.
Garanti Bank maintained its expectation for the EUR/RON parity of 4.78 by the end of the year. Other factors such as investor sentiment and reallocation of portfolio flows could play into the equation, it added.
(1 euro=4.6296 lei)