The European Commission revised downwards its 2018 estimates regarding the economy of Romania, also known in the past years as the economic tiger of the EU.
Romania’s economic vigor has started to diminish, as shown by the autumn estimates of the European Commission made public on Thursday. The EC has revised significantly downwards its estimates on Romania’s economic growth for 2018, from 4.5% to 3.6%. In 2019 the country’s economic growth rate is expected to stand at 3.8% as compared to 3.9% as forecast in spring, while for 2020, the EC estimates a growth rate of 3.6%.
Nevertheless, the Romanian finance minister, Eugen Teodorovici, said that the Romanian Government sticks to its 5.5% estimates regarding the country’s economic growth for 2018: “The government has made certain estimates, that you may well know, and we continue to maintain those estimates, in the sense that the country will report economic growth. Taking a look back, we can see that we were right, every year the estimates made by the government proved to be correct.”
In exchange, the Liberal opposition represented by Senator Alina Gorghiu questions the government’s forecasts. According to her, the EC forecasts show that Romania’s economy is massively slowing down due to the policies of the government coalition made up of the Social Democratic Party and the Alliance of Liberals and Democrats, and she called on the Social Democrat leader and the PM Viorica Dancila to present the reality of the Romanian economy.
“Without manipulating the figures, a fact that will be unveiled by the European partners, the 2019 budget cannot be drafted so as to include the promises made the Social Democrats. I’m asking Liviu Dragnea, Viorica Dancila and Eugen Teodorovici to come out publicly and provide clear information about the real figures in the state budget and the Romanian economy.”
According to the EC, Romania’s economic boom is subsiding as the private consumption rate is slowing down, and the negative contribution of net exports to growth continues to worsen. The EC also reports that, for the forecast period, the GDP is estimated to grow moderately. Private consumption remains the engine behind economic growth, the EC underlined, and the figures published on Thursday show that domestic demand will have a lower contribution to the GDP growth, of 4.2% as compared to 7.3% reported last year. The contribution of domestic demand is estimated to slightly increase at 4.3% in 2019 and to drop to 4.1% in 2020. As regards inflation, the EC revised slightly upwards, to 4.3%, its estimates for 2018 as compared to 4.2% as forecast in spring, with the consumption price index estimated to go down to 3.5% in 2019 and to 3.3% in 2020, as a result of lower domestic demand. In turn, Romania’s central bank has maintained its inflation forecast at 3.5% for the end of 2018 and increased it slightly for next year.