Eurobank report: Romania’s GDP growth outstrips European neighbours’


Romania’s economy looks set to post solid growth in the second quarter, according to a new report by Eurobank, Wall Street Journal informs, quoted by Agerpres. The Greek bank’s upbeat assessment is the latest in a string of forecasts for the country that point to strong overall growth this year. “Despite being buffeted first by the debt crisis in the neighbouring eurozone and more recently by jitters over emerging markets brought on by the crisis in Ukraine, Romania has weathered Europe’s turmoil better than most”, WSJ underlines.  The latest revised growth figures show that Romania was the fastest growing economy in the European Union, with gross domestic product rising a better-than-expected 3.9 percent in the first three months of the year. That follows a 3.5 percent jump in output in 2013, after a 0.4 percent rise in 2012 during the depths of the eurozone crisis, according to figures from the Word Bank.
What’s particularly encouraging is that Romania’s growth momentum this year shows signs of spreading. Where last year’s GDP was driven mainly by exports – thanks, in part, to a bumper agricultural harvest – the latest figures show that the economy is now being driven by improving domestic demand.
An increase in minimum wages in January has helped boost private consumption, while industrial output, particularly in the automotive sector, is also gaining traction. Fresh data show that monthly salaries rose 4.4 percent in May compared with a year earlier, while industrial production was up 10.9 percent in April. “In all, the data adds to hopes about solid GDP growth in the second quarter of 2014 following a 3.9 percent year-on-year [rise] in the first quarter of the year, which was primarily driven by industrial production and exports,” says Eurobank.
The Greek analysts forecasts that Romania’s GDP will grow by 3.0 percent this year, up from its previous forecast of 2.7 percent. It’s not alone: In June the World Bank boosted its outlook for the Romanian economy to 2.8 percent, from 2.5 percent before. Earlier this year, Romania’s central bank implied it will stand pat on further rate cuts, signaling that it sees the recovery taking hold. Risks remain, however. Further turmoil in Ukraine could dampen enthusiasm for the region’s economies generally, and the still-anemic recovery in the eurozone could hobble growth. And while domestic demand is on the up, public-sector spending and private investment are still down, suggesting that Romania’s rebalancing act still has some way to go.