Romanian Economy Grows Fast in 2017

.

In Q2 2017, the Romanian economy expanded by 5.9 per cent, compared to the same period in 2016, according to a preliminary estimate by the National Institute of Statistics (INS). The figure marked an acceleration from Q1’s 5.7 per cent expansion and vastly overshot the market’s expectations of a slowdown to 4.8 per cent. 

“ We don’t have a detailed breakdown of Q2 GDP growth yet, but based on releases of various economic indicators for the quarter, we think that the industrial and the services’ sector has continued to prop up growth in the most significant way,” Horia Braun Erdei, chief economist and head of research at Banca Comercială Română (BCR), tells Emerging Europe

“For the former, the second quarter was one of the strongest in the post-crisis period, following through on an equally strong first quarter. In the case of services, growth has been even more consistent, with services for firms being front-runners and having taken over the leadership from retail sales, more than one year ago. Thus, conventional wisdom that says that this economic growth is all about consumption is too strong an assertion, we feel. Consumption has been leading on the demand side, but the push has also been transferred to the broader economy in the last couple of quarters – but potentially less so in Q2 — and growth was also spurred by exports, with foreign demand being in pretty good shape too,” he adds.

“The current pace of growth of the Romanian economy is unlikely to be sustainable going forward,” Christopher Mc Innes, Romania Economist at FocusEconomics, tells Emerging Europe.

“The effects of the tax cuts and salary hikes that have fuelled the current consumption-led economic boom are expected to recede as higher inflation starts eating into consumers’ newly found purchasing power. For these reasons, the Central Bank is expected to tighten its monetary policy in order to keep inflationary pressures in check. This could keep investment growth muted and mitigate the benefits of the greater absorption of EU funds. At the same time, the government is likely to tighten its fiscal policy, in order to avoid a stern talking to from Brussels,” he adds.

Earlier, in June 2017, Austria’s Erste Group, which owns Banca Comercială Română, revised the 2017 forecast to 5.5 per cent from 5.1 per cent.

“If we consider that first semester’s average year-on-year growth was 5.8 per cent. This basically means we expect a slowdown in growth for the remaining two quarters. In case of quarter-on-quarter numbers, it’s actually quite a significant slowdown, almost halving the growth from Q2. When translated into year-on-year terms, however, and because of the base effect, growth will still appear as strong, averaging slightly above five per cent in our view. We base our slowdown scenario on what we see as a loss of momentum in fiscal easing, on potentially peaking consumer confidence and on the likelihood that investment activity, which was sluggish in the first half of the year, will remain just as sluggish in the second semester, because of a lack of public sector spending and significant delays in the absorption of EU structural and cohesion funds,” BRC’s Mr Erdei says.

RELATED ARTICLES

Jadranka Joksimović: Serbia Takes Its Candidacy of the EU Seriously

bigstock-Joint-Press-Conference-Of-Serb-155400338.jpg

Digital Business Space Gives All Businesses an Office in Sarajevo

Sarajevo Bosnia and Herzegovina - August 24 2015. View from Vraca Memorial Park with building of Avaz Twist Tower

Towards a resilient Europe, strategies for the future

EU Membership and Transition into Market Economies Have Helped CEE Achieve Social Progress

Estonia — Easy Doing Business Destination seminar in the UK

Mayor: Armenia And Its Capital Yerevan Offer Safe Investment And Tourism To a Growing World

Ukraine Is Offering Europe Unique Combat and Technological Experience

Bosnia and Herzegovina: Focussing on Stability and Business Climate

Sarajevo Bosnia and Herzegovina - August 23 2015. View of Miljacka River in Sarajevo city

Foreigners choose Minsk and Gomel as Belarus’ most attractive FDI destinations

After Economic Shocks Armenia Plans for Macroeconomic Stability

yerevan armenia minister of finance

21st century Manufacturing Arrives at Great Stone

Great stone

Merkel: Albania is taking big steps forward

Fitch And the World Bank: Economic Growth To Remain Solid Within CEE In 2016

Estcoin: Estonia’s Own Digital Currency?

1 euro coin money (EUR) currency of European Union Estonia over blue background

Lviv Is the Pearl and the Soul of Ukraine

Investing in Ukrainian Food and Agriculture

Derek Chollet: There Is a Resurgence of Supporters of the Transatlantic Relationship

white house

Serbia, Belarus and Ukraine Ranked Lowly by Wharton Business School

Kyiv Ukraine - April 172017: The postal square in Kiev on Podol the Dnipro river. view of the square from the river panorama

Bulgaria’s cooperation with Israel could boost the economy

Poland Is Set To Become a Large Economic Zone

Aerial view over the building materials processing factory. View from above.

Lithuania Gives Innovation a StartUp

MILAN ITALY - MAY 2: People visit Lithuania pavilion at Expo universal exposition on the theme of food on MAY 2 2015 in Milan.

Belarus-Turkey Investment Forum to increase investment and trade between the two countries

Putin Urges Belarus to End Oil Transit Through Lithuania

Athens Greece - May 27 2016: Russian President Vladimir Putin delivers

Air Passenger Volumes Reach Record High in the Baltics

airbaltic

Bloomberg Croatia Business Day 2015

Plovdiv — an emerging outsourcing destination

Macedonia — Stepping Out Of the Shadow Of the Balkans

New investors interested in Belarus’ Great Stone Industrial Park

Economy Minister: Internationalisation Is the Key To the Slovenian Economy

Ametek opened a new factory in Subotica

EY: Belarus’ IT Scene Is Thriving

High tech park minsk

World Bank’s Doing Business Report 2016 Resume For Emerging Europe

Belarus’ Economy Is Slowly Recovering From Past Declines

Lech Wałęsa: Hard Options Can Force Nations to Get Down to Work

Moldova Launces New e-Procurement System In Search For Positive Change

Photo team work process, holding contract hand, signs documents. Account managers young crew works with startup project.New idea presentation, analyze marketing reports.Blurred, film effect, horizontal.

A Risky Evaluation of Croatia’s Economy?

ZAGREB, CROATIA - JULY 17, 2017: Square Ban Josip Jelacic with tourists and trams on a summer day in Zagreb. City of Zagreb is the capital of Croatia.

CEE-Benefits and Disadvantages of Joining the Eurozone

forint zloty euro

Poland’s Q2 2017 Growth Is Stronger Than Expected

WARSAW, POLAND - MAY 07, 2016: Building Palace of Culture and Science among the modern buildings of the city

Hungary Today: Potential and Challenge

Chain bridge on Danube river in Budapest city. Hungary. Urban landscape panorama with old buildings and domes of opera

Automotive and Transport Companies Dominate the CEE Region

Car bodies on the production line inside automobile factory

Business Standards Are High in SEE But Vary Widely

Aerial view of The Cathedral of the Assumption in Varna

Latvia Urged Not to Increase Expenditure As Economy Grows

Riga, Latvia - August, 2010: Panorama view from Riga cathedral on old town of Riga, Latvia

GE Inaugurates Its New Bucharest Software Centre

Asian Outsource Developer Team Sitting At Desk Working Laptop Computer Mobile Application Software Real Office

Kosovo: A Population of Talented Young Entrepreneurs Waits at Europe’s Door

World Bank: Brexit Hides Greater Challenges to the European Union and the CEE Region

Albania is creating three free economic zones

Emerging Europe Makes Great Strides in Improving Business Regulation for Entrepreneurs

Skopje Macedonia

Economy builds bridges in Mostar

The Czech government attracts FDI and creates jobs

Investigations Into the Corrupt Ukrainian Fuel and Energy Sectors

Ukrainian money hryvnia. The national currency. Corruption in Ukraine

German Multivac invests €15 million near Sofia

Poland’s Business Constitution Must Be Finalised

Front of finance ministry in Warsaw Poland with a fountain framing the entrance. Could be used for images about Euro currency problems

Slovenia is the CEE region’s leader in VAT collection

Revenues Of Bulgarian IT Companies Have Sextupled In the Last Decade

High-Tech Park in Minsk is growing rapidly

Nadiya Savchenko: I Dream of a Great Ukraine

Panorama of the top part of the Andrew's Descent from Castle Hill in springtime in Kiev Ukraine.

Non-Financial Reporting No Longer a Secondary Consideration in CEE

Chris Lowney — What Jesuit Spirituality Can Teach Us About Global Leadership

Changes Are Making Ukrainian Banking More Aligned with International Standards

Ukraine to Restart Privatisation to Realise Profits

Pricatisation electricity ukraine

Sarajevo Stock Exchange Connected to SEE Link

sarajevo stock exchange

The Slovak Matchmaking Fair open for registration

SEE Link — Sharing SEE Europe’s Hopes for a Brighter Investment Future

More Brexit Fears As the UK Proves To Be A Needed Member

City of London view from Waterloo Bridge. This view includes: St. Paul`s Cathedral The Gherkin Tower 42 and Blackfriars Bridge.

Valga and Valka – Where Estonia and Latvia Work Together

Valga valka emerging europe

Western Ukraine Could Be an Entry Point into the Country

IMF Believes State-Owned Enterprises Must Be Reformed

Image of the banknotes of new Belarusian banknotes five rubles put into circulation July 1 2016

EBRD Finances Small Business Support And Foreign Trade Promotion In Belarus

Polish Labour Market Deficits Are Impacting All

Construction site with crane and building. Construction site in western europe - in Poland.

Doing Business Across Eurasia Could Be Easier

Eurasia emerging europe schneider group

CEE Emigrants Could Boost Their Countries’ Economies

Londoners walking through Millennium Bridge with St.Paul's Cathedral at the background after sunset - London, UK

Ukraine’s Q2 Growth Climbs

kyiv ukraine emerging europe

Slovenia is CEE’s leader in innovation

Croatian Salaries Are Growing in Line With Other CEE Countries

Dubrovnik Croatia emerging europe

Prospering Czechia Still Needs a Bigger Workforce

prague emerging europe

Effective Policies Have Strengthened the Georgian Economy

TBILISI GEORGIA Jul. 18 2017: Bridge of Peace is a bow-shaped pedestrian bridge a steel and glass construction over the Kura River in downtown Tbilisi capital of Georgia

The Reality in Romania Exposes False Perceptions Of The Country

Belarus is the most creative EEU country

Meghri Becomes Armenia’s Third FEZ

armenia emerging europe

Albania’s Construction Sector Supports the Country’s Growth

SARANDA, ALBANIA - MAY 18: View of the city Saranda, most important tourist attraction of the Albanian Riviera on May 18, 2017 in Saranda, Albania.

Larisa Manastirli: Where is Bulgaria After Ten Years in the EU?

Do Your Homework First and Starting Business in Poland is Easier

PE and VC Investment In CEE Is At an Eight-Year High

venture capital

EconMin: Bulgaria — Number One Outsourcing Destination And an Island of Stability in Europe

Globalisation Needs to Work, Not Only for the Few but for the Most and in Demonstrable Ways

Global Spread

Leave a Reply

Your email address will not be published. Required fields are marked *