The European Commission (EC) increased its forecast for Romania’s economic growth by 0.5pp to 3.8% for 2021 and by 0.2pp to 4% for 2022. The previous projections dated from last November.
The Commission estimates that Romania’s GDP contracted by 5% in 2020. Furthermore, it says that the risks to Romania’s growth forecast are tilted to the upside – namely, the recovery could be stronger.
Particular upside risks for Romania are a fast implementation of the Recovery and Resilience Plan (quick absorption of EU funds) and improving public finances (such as narrowing the wide VAT gap).
Although Romania will fully recover the losses incurred during the pandemic, such growth rates are unlikely to help it catch up with the more developed peers and increase its GDP per capita as a share of the EU average.
The European Commission estimates that the EU economy will grow by 3.7% in 2021 and 3.9% in 2022, while the Eurozone economy will grow by 3.8% in both 2021 and 2022.