SeenewsSeenews
Search
Seenews
AlertsSeenewsSeenews
Searchclose
TOPICS
arrow
COUNTRIES
arrow
INDUSTRY
arrow
Economy
arrow
Browse Economy
Mix and match your focus countries with our advanced search
Investments
arrow
Browse Investments
Mix and match your focus countries with our advanced search
Deals
arrow
Browse Deals
Mix and match your focus countries with our advanced search
SEE TOP 100
arrow
Browse SEE TOP 100
Latest in SEE TOP 100
Tech
arrow
Browse Tech
Mix and match your focus countries with our advanced search
Green
arrow
Browse Green
Mix and match your focus countries with our advanced search
0/5
You have 5 free articles left this month
You have 0/5 free articles
Sign up to get 5 more free articles this month
SIGN UP
arrow
LOGIN
arrow

UniCredit cuts Romania's 2024 GDP growth f’cast to 2.4%

Jul 10, 2024, 5:45:31 PMArticle by Alexandru Cristea
share
July 10 (SeeNews) - Italian financial group UniCredit said it has downgraded its forecast for Romania's economic growth in 2024 to 2.4% from 2.7% projected in March due to economic growth slowing to a standstill in the first quarter of the year.

UniCredit cuts Romania's 2024 GDP growth f’cast to 2.4%
UniCredit Romania

"Domestic demand will drive growth this year, with exports likely to play a more important role in 2025," UniCredit said in the latest edition of its CEE Quarterly report published at the end of last month.

Private consumption is expected to remain strong this year thanks to positive real wage growth and large pension increases enacted in September. Rising house prices bode well for housing projects, while investment in the industrial and logistics space continues at a fast pace. Better demand from the EU is expected to boost industrial production and exports in the second half of the year, but higher imports could reduce the positive impact on gross domestic product (GDP) growth, as per the report.

UniCredit also revised its forecast for Romania's GDP growth in 2025 to 1.3% from 1.9% projected in March, due to a raft of tax increases and much lower government transfers that are predicted to slow economic growth sharply next year.

Due to the government being expected to tighten fiscal policy only after the parliamentary elections, which will be held very late in the year, the budget gap could exceed 7% of GDP in 2024, UniCredit warned. Last month, Romania's finance ministry said that the country's consolidated budget was in deficit equivalent to 3.4% of the gross domestic product (GDP) in the first five months of 2024, widening from a 2.3% budget gap recorded in the same period of 2023.

Inflation is seen to fall to 4.6% by the end of the year. However, higher taxes next year would fuel inflation and keep it above 4%. A return inside the target range of 1.5%-3.5% is possible in 2026 if the fiscal adjustment continues by raising the personal income tax (PIT) rate, the Italian financial group noted.

UniCredit also said that Romania's central bank, BNR, might cut the key rate to 6.5% by the end of 2024 before potentially lowering it further to 5% next year.

On July 8, the BNR cut its monetary policy rate to 6.75% from 7%, thanks to the annual inflation rate seeing a faster-than-anticipated decline in the first two months of the second quarter of 2024, falling to 5.12% in May from 6.61% in March.

Your complete guide to the emerging economies of Southeast Europe. From latest news to bespoke research – the big picture at the tip of your fingers.