October 11 (SeeNews) - Raiffeisen Bank Romania said on Wednesday it has revised its forecast for the country's 2017 economic growth to 5.7%, up from 4.9% forecast in July.
In 2018, Raiffeisen sees Romania's economic growth decelerating to 4%.
Like in most SEE countries, one of key factors in Romania's GDP growth this year is private consumption, Raiffeisen Bank said in its fourth quarter Central & Eastern European Strategy report.
In 2016, Romania's economy expanded by 4.8% year-on-year compared to a revised growth rate of 3.9% in 2015.
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.
Raiffeisen Bank sees Romania's average annual inflation at 1.1% in 2017 and at 3.7% in 2018, up from the previous forecast. In July, Raiffeisen saw Romania's inflation at 0.9% this year and at 2.9 in 2018.
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. In its latest inflation report issued in August, Romania's central bank BNR increased its annual inflation forecasts for this year and next, to 1.9% and 3.2%, respectively, from 1.6% and 3.1% projected earlier.
Regarding monetary policy, Raiffeisen said that the European Central Bank’s monetary policy will continue to keep a lid on interest rates in the EU countries, and outside of the euro area as well. "We expect to see monetary policy tightening and rate hikes in the Czech Republic, Romania, and finally in Poland," Raiffeisen analysts pointed out.
On October 3, BNR maintained its monetary policy rate at record low 1.75%. BNR's board also decided to narrow the corridor of interest rates on its standing facilities around the policy rate to ±1.25 percentage points from ±1.50 percentage points.
The central bank last changed its key rate in May 2015, when it cut it by 25 basis points.
On Tuesday, the International Monetary Fund (IMF) said that Romania's real GDP growth is projected to reach 5.5% in 2017 before it decelerates to 4.4% in 2018.
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.
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.
(1 euro=4.5854 lei)
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