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January 16, 2021

EC: Estimates on economic growth in 2017 – revised to 4.3 pct, uniform pay law – significant risk

The European Commission (EC) has revised downwards its estimates for this year with respect to the rise of the Romanian economy and the public deficit and warns that the uniform pay draft law represents a significant risk to the fiscal targets.

According to the spring economic forecast published on Thursday by the Community Executive, the Romanian economy is expected to record an advance of 4.3 pct in 2017, below projections in the winter forecast which were indicating a 4.4 pct GDP growth.

For 2018, the European Commission maintains its estimates that the advance of the Romanian economy is expected to slow down to 3.7 pct.

“The uniform pay draft law represents a significant risk to tax estimates, with a potential impact of up to 2 pct of the GDP on the government balance in 2018,” the EC warns.

With regard to inflation, the EC estimates that it will gradually increase and will return to the National Bank of Romania (BNR) target range due to robust domestic demand, new wage increases and new tax incentives. “The average annual inflation rate is projected to return to positive territory in 2017 (1.1 pct) and to continue to grow to 3 pct in 2018”, argues the EC.

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