Optimistic economic forecast

The European Commission has improved its forecast on the Romanian economy

Daniela Budu, 08.07.2021, 13:50

Romania will have the highest economic growth rate in the EU this year, according to the summer forecast of the European Commission, which predicted the Romanian economy will grow by 7.4% this year and by 4.9% next year.

The new forecast for 2021 is 2.3% higher than the spring estimates, because, according to the European institution, the Romanian economy performed strongly in the first quarter. The confidence of consumers and business people has also remained high so far. Private consumption is expected to stay sound, backed by the lifting of COVID restrictions, particularly in the fields hit severely by the pandemic, and by the increase in salaries in the first months of the year, the Commission said.

Moreover, investments will remain strong in 2021-2022, supported by both the private and public sectors. Exports are set to improve in line with the ongoing recovery in Romanias main trading partners but the contribution of net exports to growth is expected to remain negative over the forecast horizon, the Commission believes. Growth is projected to continue into 2022, although at a slower pace.

PM Florin Cîţu says these forecasts are the consequence of the private sector responding well to the measures implemented so far, and having confidence that all the reforms announced by the government will be implemented.

Meanwhile, professor Mircea Coşea, Ph.D., explains what these figures actually mean for Romania, in his opinion:

Mircea Coşea: “This 7% growth is actually not growth but recovery. In macroeconomic terms, there is a major difference between recovery and economic growth. What we are actually doing is recovering, that is, getting back to where we were. This is not necessarily to mean we will live better. Moreover, if we look at whats behind these figures, we will see things are rather disquieting. A recovery at this record-rate for the EU is not healthy. Compared to other countries around us, this extremely high figure means that in fact Romania does not rely on a proper economic foundation, but on loans.

At EU level, the economy is expected to grow by 4.8% this year and 4.5% in 2022, after economic activity above expectations in the first quarter and after the easing of COVID containment measures in the second quarter. (tr. A.M. Popescu)