Revised growth targets in Romania may signal a brighter economic future

“World Bank recently increased Romania’s GDP forecast by 0.7 percent to 4.3 percent in 2017,” Binay Sarda, an investment research assistant manager at Aranca, told Balkan Business Wire, adding that new projections of 3.7 percent for 2018 and 3.5 percent in 2019 have also been set.

“We believe consumption will continue to be the primary engine of GDP growth in the coming years, backed by a rise in the minimum income and wages in the public sector,” Sarda said, also citing increases in public pensions and tax cuts.

“Various reforms are expected to transfer the consumption-led economic growth to production-led growth by supporting private investment, through cancellation of the construction tax and low cost of funding,” Sarda said. “However, we feel that fiscal relaxation is likely to put pressure on the budget deficit, and may exceed the target of 3 percent of GDP set by the government. This could result in increased costs of government borrowings and lead to currency devaluation.”