Romania’s economy grew by 1.7% in the first 6 months, according to data sent on Wednesday by the National Institute of Statistics. Based on the reduction in population consumption (due to inflation and cost of living), the economy slows down its main engine.

Compared to the first quarter, growth in the second quarter was 0.9%, Statistica also shows.

Reduced savings during the pandemic, high prices (mainly for food) and higher bank rates are making consumers think twice about the purchases they are considering. They turn to cheaper products and shift their preferences between different product brands, BRD economists said in the report.

Also, the latest available data indicate the deterioration of economic indicators. Exports, which grew by 28% last year, registered a modest 6% in the first half of the year, while industry turnover rose just 3% in the first 5 months after growth of more than 27% in the first half. 5 months of the previous year.

What indicators of economic growth of Romania are counted on by international institutions and bankers

The European Commission expects economic growth of 3.2% for Romania in 2023, which exceeds the IMF forecast of 2.4%. The factors underlying these growth estimates are private consumption (also supported by indexation of salaries and pensions, as well as government support schemes, including in the energy sector) and investment (investment growth is also supported by the expected absorption of funds allocated by the CE as through the multi-year financial structure, as well as through PNRR).

For 2023, the government’s economic growth forecast of 2.8% may be subject to revision under conditions of very high uncertainty, with a high probability of a downward revision, the Fiscal Council says.

Based on our assumptions for real GDP growth (2.1% y/y in 2023 and 4.2% y/y in 2024), our model shows that the unemployment rate will rise slightly to 5.8% this year due to the slowdown of the economy and the deterioration of the economic situation. conditions, BCR economists say in the report.

In another report sent to investors by BRD, economists expect growth of 2.6% in 2023 and 3.4% in 2024. Figures that may turn out to be optimistic, given the existing risks.

“There are questions about the prospects for the progress of reforms initiated under the National Recovery and Resilience Plan, which is important to unlock future funding. Then we see uncertainty and volatility in agricultural markets, where high production estimates are offset by increased frequency of extreme weather events, global economic challenges and still high production costs. No less important is the risk of improper implementation of the budget, which may lead to under-fulfilment of investment expenditures as a means of achieving the target deficit,” the report of BRD economists states.

The latest statistical data indicate a continuation of the trend towards a slowdown in economic activity in the 2nd quarter of 2023.

Forced austerity cuts from the COVID era, high prices (mainly for food) and rising bank rates are making consumers think twice about their purchases. They tend to switch to cheaper products and switch between different product brands.

REVIEW

As a result of the revision of the gross series by including in the quarterly series the assessment of the gross domestic product for the II quarter of 2023, a recalculation of the seasonally adjusted series was carried out, a revision of the physical volume indices in relation to the second preliminary version of the gross domestic product for the I quarter of 2023, published in the press release press no. 172 of July 7, 2023, as amended:

– the results of the II quarter of 2022 compared to the I quarter of 2022 were revised from 100.7% to 101.0%;

– the results of the III quarter of 2022 compared to the II quarter of 2022 were revised from 101.0% to 100.4%;

– the results of the IV quarter of 2022 compared to the III quarter of 2022 were revised from 101.0% to 100.9%;

– the results of the 1st quarter of 2023 compared to the 4th quarter of 2022 were revised from 100.2% to 100.5%;