The European Commission said in its Winter 2017 economic forecast that Romania’s economy grew by 4.9 percent of GDP last year – a new post-crisis high – and that GDP expansion is set to slow down through to 2018, while the budget deficit will widen.
For this year, the EC estimates that the local economy will grow by 4.4 percent of GDP, while next year, the growth rate will further fall to 3.7 percent, according to Business-Review.ro.
Meanwhile, the center-left government led by Sorin Grindeanu has based this year’s budget on a grow rate of 5.2 percent of GDP and a public deficit below 3 percent.
“In 2017, the general government headline deficit is projected to deteriorate further, to 3.6% of GDP,” according to the report, which mentions that the increasing deficit is marked by the fiscal easing.
The EC experts point out that the reduction of the BAT rate by one percentage point this year means that “Private consumption is expected to grow steadily in 2017, before it moderates slightly in 2018 as consumer prices pick up.”
On the labor market, the EC forecasts that the unemployment rate is set to fall by from 6 percent to 5.7 percent this year, while the unit labor costs are set to grow following the increase of the minimum wage and public sector wages.