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Economic forecasts for 2015

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After an increase a Romania’s GDP last year by 2.9% in real terms compared to 2013, one of the highest economic growth rates in the EU, the economic forecasts for this year in Romania indicate a growth of 2-3%. The government, for example, provides in its state budget for an economic growth rate of 2.5%, a cautious target which will nevertheless force a growth rate of more than 3%, depending on external factors, Cristian Socol, an advisor to the prime minister told Agerpres agency. In his opinion, the budget is again focused on investment and the creation of new jobs. “Expenditure dedicated to investment is by 24% higher than in 2014. The 2015 budget also encourages the private sector by increasing co-funding for the absorption of European funds, state guarantees and state aid schemes, more support for farmers, concrete facilities for foreign investments with added value, the development of industrial and technological parks and incentives for technical education”, said Socol.

The 2015 state budget provides for a deficit level of 1.83%, as agreed upon with the International Monetary Fund and the European Commission, and an average annual inflation rate of 2.2%. The market research company Business Monitor International estimates that the Romanian economy will grow by more than 3% this year and in 2016, based on the transition from export-based growth to growth generated by domestic demand. The National Forecast Committee expects an economic growth of 2.5% for this year. The figure is closer to the estimates of the European Commission and the International Monetary Fund of 2.4% and 2.5%, respectively, but below the growth rate of 3.2% predicted by the World Bank in June 2014.

Economic analyst Constantin Rudnitchi speaks about what happens in the private sector: “In the private sector things still do not work as well as we would like them to, or as the macroeconomic parameters indicate. In other words, this economic growth that we have been talking about a lot recently, does not necessarily transfer into the private economy. We are in a paradoxical situation, as figures indicate, there is a lot more stability in the budgetary sector and sometimes even the salary increases come from this sector, rather than from the private economy. This is a proof that the real economy is not yet working properly, that those macroeconomic increases do not translate in real data, that many economic sectors probably still experience difficulties, businesses are affected, they either fail to grow or they grow very slowly, and entrepreneurs are very careful about the salaries they pay to their employees. Although the industry as a whole accounts for roughly 30% of Romania’s GDP, there are only some industrial sectors with good performances, or even specific companies in those sectors, particularly exporting companies and those companies which have substantial sales on the domestic market, namely companies in the oil sector, natural gas sector, the energy sector in general.”

We should also note that Standard & Poor’s rating agency expects Romania’s GDP to grow by an average 2.7% in 2015 – 2017, while Fitch estimates a 3% annual growth rate for 2015 – 2016, as a result of resumed investments, among other factors.

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