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January 22, 2022

Garanti Bank anticipates 1.7 pc economic growth in 2013

Garanti Bank anticipates 1.7 per cent economic growth this year, amidst growing investment and better spending of EU funds, 3.9 per cent inflation rate at the end of 2013 and an appreciation of the local currency by 2 per cent, to an exchange rate of RON. 4.35/EUR in December, according to the Q1 macroeconomic report prepared by the bank, Mediafax notes. The bank’s estimates for Romania are based on a modest recovery of agricultural production and the potential of implementing announced privatisation plans, re-launching infrastructure projects and increase of the rate of absorption of European funds. ‘In the next period we expect inflationist pressures generated by energy prices.

The process of electricity price liberalisation agreed upon with the IMF will begin this year, with an increase by 10 per cent in July to continue to 100 per cent at the end of 2017. In addition, green energy subsidies will add 8 per cent to the price of electricity this year,’ says Garanti Bank Chief Economist Rozalia Pal.In what regards the European structural funds, according to the Garanti Bank forecast, they should reach an approximate total of EUR 2.5 bn and nearly EUR 2 bn concerning rural development and agriculture. Private investment achieved through privatisation and estimated at approximately EUR 1.5 bn, will also attract foreign funds. Pal says, in the context of an imbalance of new attracted capital and launching of investment projects, there may be no visible impact on the GDP this year, however investment will contribute to long-term sustainable growth.

The national currency will appreciate by about 2 per cent this year, thanks to an improving country risk profile and new investment alternatives, according to Garanti Bank, who expects an exchange rate stabilised in the region of RON 4.35/EUR at the end of 2013 and RON 4.25/EUR in 2014, provided the political context stays stable.

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