According to analysts’ forecasts, in 2013 the government in Bucharest and international financial institutions say Romania’s economy may grow.
According to analysts’ forecasts, in 2013 the government in Bucharest and international financial institutions say Romania’s economy may grow by between 1 and 1.6%, after the bare growth of 0.7% in 2012. The latest forecasts from the EC say that Romania will have a 1.6% growth rate, the highest in the EU after Latvia, Lithuania and Estonia, while the Eurozone will see its second year of shrinking, and the EU will have a growth of a mere tenth of a percent. The figure issued by the World Bank is also 1.6%. That institution’s main economist for Romania, Catalin Pauna, pointed at the main directions which may contribute to better economic growth this year:
“The risk of volatility is always very high in agriculture, and we’ve all seen the difference between 2011 and 2012. 2011 was a very good year in agriculture, the substantial output boosted overall growth, by 2.2%, which was unfortunately not the case in 2012. The impact on overall growth was only 0.3%. it is hard to believe that agricultural output this year can be worse than last year, therefore it will have a positive contribution, and traditionally, I could say, the manufacturing industry will perform better, especially the one linked to exports, and especially if Europe restarts in the second half of the year. We will see if we can set in motion once again lending, which will improve investments a bit.”
Experts from the Romanian Commercial Bank, a member of the Austrian group Erste, estimates the Romanian economy will grow by 1.1%. According to them, the economy will gradually recover, due to local and international factors, which look more promising than last year. They predict a normal crop in agriculture, after the severe drought of 2012. RCB analyst Eugen Sinca told us:
“We believe that this 1.1% in 2013 will come from household consumption, especially after state wages go up. If we are talking about more widely about Romania’s economic growth in 2013, we believe that it will sit on three pillars. The first pillar is a pro-growth state budget, announced in January by the government. The second pillar is growing investor confidence on European financial markets, which could be seen soon in the real economy of the Eurozone, and then the real economy of Romania. The third pillar could be a normal agricultural year, compared to the severe drought of 2012.”
In their report, RCB experts also estimate that inflation could reach 4.3% in December 2013, but only after reaching a peak of 5.6% in the second quarter. Very important will be price hikes for energy and gas. The document also indicates that the national currency, the leu, will appreciate with an average of 2%, so that in 2013 the exchange rate will stabilize around 4.4 lei. Also, RCB experts anticipates a bounce back of foreign direct investment, some time in the third or fourth quarter of this year. The report also points out that in the future, Romania’s economic growth should be based more on a rise in productivity, rather than on other sources:
Vice-president of the European Bank for investment, Mihai Tanasescu, believes that Romania will have economic growth this year:
“I believe that 2013 will generally be a good year for Romania. Let’s not forget that in the last three years, 2011, 2012, and 2013, Romania has been among the few countries of Europe with economic growth. We don’t have fluctuations. Therefore there is a political stability first, then macroeconomic stability, there is a reform program which started being applied, but which has to be accelerated. All these elements with a plus sign, which will surely be brought forward and put into practice as soon as possible, can only lead to improved perception on the part of investors. We have a great opportunity, a unique opportunity, which many other countries do not, namely we are able to attract more European money, to be able to use cheap investment money, such as those from the European Bank for Investment, to be able to use resources for large scale projects, so that the economic growth is allowed to reach its potential in Romania, that of 3 to 4%. This is possible; in two or three years we may reach this potential.”
Government representatives also estimate for this year a budget deficit of 2.1% of the GDP.