IMF upgrades 2013-2014 GDP growth forecast for Romania

By bne IntelliNews August 1, 2013

Romania’s GDP will rise by 2% this year and by further 2.25% in 2014 under the scenario drafted by the IMF experts during their visit in Romania, the head of the Fund’s expert team visiting the country, Andrea Schaechter, said as quoted by Mediafax.

The previous forecast of the IMF was drafted in April under the World Economic Outlook and it included growth rates of 1.6% for this year and 2% for 2014. The economic recovery seems to accelerate, the IMF representative explained. Furthermore, the farmers’ crop this year is much better than in 2012, she added.

The IMF also expects Romania’s CA gap to narrow to 2-2.5% of GDP this year, the Fund’s resident representative also informed. The IMF previously expected Romania’s CA gap on the opposite - to slightly widen to 4.2% of GDP this year and 4.5% in 2014, under the April Outlook. The gap was 3.9% of GDP in 2012 down from 4.5% a year earlier. In the rolling 12 months ending May, the gap was 1.9% of this year's GDP forecast.

The consumer price inflation will enter the band set under the inflation targeting regime [2.5% +/-1pps] before the end of the year, Schaechter said.

Romania’s central bank has cut its end-year inflation forecast to 3.2% y/y under the latest Quarterly Inflation Outlook released on May 8, down from 3.5% y/y forecasted in February. The inflation will come within the targeted band at an earlier moment, probably in September, the c-bank's outlook said.

Under the latest data available, inflation accelerated marginally to 5.37% in June from 5.32% y/y in May, more or less in line with the central bank’s 5.3% y/y projection. The adjusted CORE2 inflation, however, accelerated to 2.85% y/y at the end of June from 2.65% at the end of May – 25bps above the central bank’s expectations.

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