October 11 (SeeNews) - Romania's real GDP growth is projected to reach 5.5% in 2017 before it decelerates to 4.4% in 2018, the International Monetary Fund (IMF) said in the October edition of its World Economic Outlook (WEO) report released on Tuesday.
In its previous WEO report published in April, the IMF said it expected Romania's economy to expand by a real 4.2% in 2017 and by 3.4% in 2018.
Romania's GDP grew by 4.8% last year and the country's consolidated budget showed a deficit equivalent to 2.41%, compared to a shortfall of 1.47% of GDP in 2015, according to finance ministry data.
The IMF's latest forecast for Romania's 2017 economic growth is now closer to the government's projection of a 5.6% increase.
In September, Romania's prime minister Mihai Tudose held a meeting with representatives of the IMF in what he said was an attempt to prevent another 'wrong' economic forecast of the global lender. The IMF responded by saying its projections reflect data available at the time of making them, while the final results are often influenced by subsequent decisions.
Tudose said at the time he did not mean to criticize the IMF. "They are a huge organization and the world is interested in their forecasts, which in our case turned out to be incorrect the last couple of times. I did not accuse them of ill intent, but I told them to be a bit more careful,."
Romania's annual economic growth accelerated to 6.1% in the second quarter of 2017, above the initial estimate of 5.9% made in September, preliminary official data showed on Tuesday.
Romania's consumer prices are seen rising 1.1% year-on-year in 2017 before they increase by 3.3% in 2018, the IMF said in the October edition of its WEO report.
Unemployment rate is projected to fall to 5.2% in 2018 from 5.3% this year and 5.9% in 2016, according to the IMF forecast.
Romania's annual inflation rate was 1.8% in September, up from 1.2% in August, according to data from the national statistical board, INS.
The country's current account deficit is expected to decrease to 2.9% of GDP in 2018 from 3% of GDP projected for 2017, the IMF said. This compares with a current account gap of 2.3% of GDP in 2016, according to the IMF.
Romania's current account balance showed a deficit of 3.631 billion euro ($3.22 billion) in the first seven months of 2017, compared to a gap of 2.226 billion euro a year earlier, central bank data showed.
On Saturday, Standard & Poor's maintained Romania's rating at BBB-/A-3, with a stable outlook, and said that the country's budget and trade deficits will increase due to the consumption-focused growth.
"Romania's procyclical budgetary stance is amplifying wage pressures in an already overheating economy. While wage convergence is desirable, pay increases that significantly outpace underlying productivity have historically led to boom-bust cycles," S&P said in a statement.
S&P also said it expects the consumption-focused growth to generate wider fiscal and external deficits, increasing the economy's vulnerability to an abrupt downturn over the medium term, though public and external debt is modest.
In August, Fitch Ratings affirmed its projections that Romania will post economic growth of 5.1% this year but also warned of risk of overheating.
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