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Ionut Dumitru: Romania's economy may grow by 3.8% in 2022
Romania may register an economic growth of 3.8% this year and 3% in 2023, according to Ionut Dumitru, the chief economist of Raiffeisen Bank.
“We cannot speak about crisis and recession yet. I see these terms have been adopted by common language, although we do not have elements to say this is imminent. Obviously, this can happen. We do not know what is happening with the war close to us. According to what is happening there, things can take a negative or positive aspect, but we do not have data which could tell us whether a recession or crisis is coming,” said Ionut Dumitru, at a meeting with the press.
According to Ionut Dumitru, consumption is the main factor feeding economic activity. In his opinion, the dynamics of salary gains in real terms, can change retail sales.
“In the private sector salary dynamics is more rapid than in the public one. The public sector had frozen salaries. We remember the long period of time when salaries grew very quickly in the public sector. But in 2021, salaries were frozen and this year there are rather small increases in the public sector, which means that in the public sector there are considerable drops. In the private sector salary dynamics is more or less in line with inflation. Pressure remains in the private sector. Companies have to pay more. But in overall economy salary dynamic is in the negative zone,” Dumitru explained.
He added that investments were good, but the dynamic of costs is worrying and the industrial sector had a disappointing evolution. At the same time, Dumitru mentioned that a 3.8% economy increase is expected this year. For next year, economic growth is estimated at 3% by the bank.
According to the economist's estimates, budget deficit in the first 5 months of the year was 4.8% of GDP estimated for this period of time. This low level was the consequence of a rapid public income increase (21.5% year to year) which exceeded the increase of public expenses (15.2%).
The chief economist of Raiffeisen Bank expects a public deficit increase in the second part of the year, on the background of implementing additional support packages for the population and companies and discounts to suppliers of electricity and natural gas. The current scenario of the bank places 2022 public debt deficit at 6.5% of GDP in cash terms (over the official target of 5.84% of GDP) and 7% of GDP in ESA 2010 standards.
Until now, BNR has favored a gradual hardening of monetary policy. Considering the very high inflation pressures, he mentioned that the central bank is expected to increase the monetary policy interest rates this year to the level of 7% from 4.75% at present.