IMF keeps 2014 GDP projection for Romania unchanged at 2.2%

By bne IntelliNews April 9, 2014

The IMF has maintained its 2014 GDP projection for Romania to 2.2% under the latest World Economic Outlook even if downgrading the prospect for whole Emerging and Developing Europe* to 2.4% from 2.7% under the previous version of WEO dated October 2013.

SAME GROWTH BUT HIGHER BASE. In 2013, Romania’s GDP expanded by 3.5% -- well above the Fund’s expectations last October – meaning that the country’s GDP will achieve the 2.2% advance starting from a higher base, under the current version of WEO compared to the October forecast. In 2015, the IMF expects Romania’s GDP to accelerate at a 2.5% growth rate.

The IMF also expects Romania’s C/A balance to slightly widen from 1.1% of GDP last year to 1.7% of GDP in 2014 and 2.2% in 2015. Not only that the country’s external position is seen as more robust than under the October 2013 forecast [when this year’s C/A balance was seen at 2.5% of GDP], but it is visibly better than the performance. For Emerging and Developing Europe, IMF expects a 3.6% of GDP C/A gap – indeed a better performance compared to the 4.5% of GDP deficit seen last October.

CORRECTION IN 2014 FORECAST DRIVEN BY TURKEY. The downgrade of the 2014 GDP outlook for the whole region [from 2.7% to 2.4%] is mainly driven by the change in the forecast for Turkey --  to 2.3% from 3.5% in October, after the 2013 performance exceeded by 0.5pps the 3.8% October forecast. For Poland, the forecast is actually improved from 2.4% to 3.1%, for Hungary from 1.3% to 2%, while for Bulgaria the forecast is maintained at 1.6%.

* including Turkey, Romania, Hungary, Bulgaria, Serbia, Croatia, Lithuania and a group of smaller economies [Albania, Bosnia, Kosovo, Macedonia, and Montenegro].

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