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Romania in 2017: Growth to fall back to 4.1 pct of GDP
The Romanian economy is set to grow by 4.1 percent of GDP next year, after expanding by 5 percent this year, according to a report by Nomura investment bank for 2017, which covers emerging economies, business-review.eu said.
The Nomura analysts pointed out that the key drivers of fiscal looseness and loose policy will continue to mark the local economy next year.
“The added new driver will be the resumption of structural fund investments in the new semester. We think the economy is overheating and a positive output gap should emerge through H2 2017,” according to the bank’s report.
The report further states that the inflation is set to reach 1.5 percent in June 2017 and further climb to 3.5 percent in January 2018, due to the closing output gap, higher food and oil prices and VAT cuts falling out of the base.
“Fiscal policy is a key risk and debt is rising. The post-election coalition dynamic should remain fraught, stymieing much more meaningful reform, though as we have seen in the last parliament there is more political maturity emerging,” added the analysts.
Nomura forecasts that the policy rate of the National Bank of Romania will grow from 2 percent to 3 percent next year. In addition, the EUR/RON exchange rate will stay at 4.45.
The bank estimates that the emerging markets will post an average growth rate of 4.8 percent of GDP next year versus 4.4 percent this year.