Romania’s state-run forecasting body CNP expects the country’s GDP to grow by 2.3% this year, while the growth rate would gradually accelerate in the coming years to 3.3% in 2017. The domestic economy expanded by 3.5% in 2013 – of which 1.1pps was due to bumper crops in agriculture that are expected to generate a high base for 2014.
This year's growth would be supported by a moderate strengthening in consumption and a robust expansion of gross fixed capital formation [GFCF]. Consumption is expected to strengthen and grow by 1.7% this year after the modest 0.3% expansion in 2013. The growth rates would further accelerate to 2.5% in 2017.
A bit more optimistic is the state forecasting body on the expansion of the GFCF, seen as reversing from last year’s 5.7% contraction to a 4% expansion this year. Later on, GFCF is seen gradually accelerating to an impressive 7.5% growth rate in 2017.
The stronger domestic demand will put some pressures on the current account balance, which is seen widening from 1.1% of GDP last year to 1.2% of GDP this year. The gap would further increase, not to measure however more than 2% of GDP in 2017.
Exports are seen as rising by annual rates of 7-8% in 2014-2017 from 10% in 2013, thus remaining a significant growth driver.
The value added generated by the industry would expand by 3.1% this year versus 8.1% in 2013, and the annual growth rates would remain in the 2-3% range for the coming period, CNP forecasts. This is somehow surprisingly low compared to the still robust external demand. In principle, the robust rise in exports can however be generated by the agriculture also. In the construction sector, the value added generated is likely to rise more rapidly, by 6.1% this year [reversing last year's 1.2% contraction]. The annual growth rates would remain above 5% in the coming years until 2017.
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