December 17 (SeeNews) - Romania’s economy is expected to grow at a rate of 3.6% in 2015 and 3.9% in 2016, contributing to further declines in poverty, the World Bank said on Thursday.
The slight slowdown in economic growth in 2015 is partly due to a drought-induced decline in agricultural production, the World Bank said in a regular report, adding that GDP growth in 2016 will be backed by strong domestic consumption and investment.
In June, the World Bank said it expects Romania to post 3.2% GDP growth in 2016.
Economic growth has been led by a strong rise in private consumption, which reached an annual growth rate of 5.4% in the first half of 2015 on the back of increases in wages and a decline in the VAT rate for food from 24% to 9% in June, the World Bank added. "The construction and industrial sectors have recovered strongly, but public investment has remained subdued, reflecting lower-than-expected absorption of EU funds."
Poverty in Romania is estimated to have declined from 35.8% in 2011 to 28.4% in 2014, driven by improved labour market conditions and increased support to vulnerable categories, the World Bank also said.
"Continued recovery of domestic demand and growth in employment and real wages, aided by low inflation should boost real incomes and lead to further declines in poverty incidence," it added.