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August 13, 2022

Erste Group report:Romania could have the fastest economic growth rhythm in CEE

In 2016, Central and Eastern Europe’s (CEE) 3.1 percent growth will surpass the Euro Area’s 1.6 percent, despite the slowing down of the inflow of European grants, and Romania’s growth rhythm will accelerate to 4.1 percent, while Poland (3.6 percent) and Slovakia (3.5 percent) will maintain the growth registered in 2015, an Erste Group analysis shows.

Romania could have the fastest economic growth rhythm in CEE this year, but this will be a period of fiscal relaxation and there is the outlook of the tightening of monetary policy, Erste analysts point out.

They expect a slowdown of growth in Hungary (2.2 percent) and the Czech Republic in particular (2.5 percent), as a result of the slowing down of the inflow of European grants in those economies. Likewise, Slovenia could also face a slowdown (1.9 percent), while Serbia’s GDP is expected to grow by 1.5 percent this year.

Last year, the unemployment rate in Central and Eastern Europe dropped below 10 percent for the first time since 2009, and Erste analysts expect the decline to continue this year too. Since CEE countries are energy importers, the recent drop in oil prices will prop up economic growth, while fiscal relaxation in Poland and Romania will improve domestic demand, the Erste Group analysis shows.

The European Commission (EC) recently announced that Romania’s economic growth rhythm could reach a peak of 4.2 percent in 2016, thanks to strong salary hikes and fiscal relaxation, and will ease slightly, to 3.7 percent, in 2017.

According to the winter economic forecast, the European Commission (EC) has thus improved its estimates on Romania’s economic growth both for 2015 and for 2016 and 2017, considering that in autumn it expected a growth of 3.5 percent in 2015, followed by 4.1 percent in 2016 and 3.6 percent in 2017.

Austrian banks, Bank Austria, Erste Group Bank and Raiffeisen Bank International (RBI) in particular, are the former Eastern European communist states’ biggest lenders and have an important presence in Romania too.




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