European Commission maintains 3.8% forecast growth for Romanian economy in 2019. GEO 114 – potential negative costs

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In its winter forecast, the European Commission maintains estimates that Romanian economy will grow by 3.8% in 2019, the same as released last year in the autumn forecast.

The anticipation for growth in 2020 remains 3.6%, a release posted on Thursday on the EC representation in Bucharest website reads.

The Commission argues that the economic growth last year was of 4%, not 3.6% as anticipated in the autumn forecast.

The inflation rate forecast is 3.3% for 2019, down from 3.5% previously, and 3.1% in 2020, down from 3.3% previously anticipated.

According to hotnews.ro, the EC warns that Emergency Ordinance 114/2018, issued at the end of 2018, setting new measures on banks and energy companies, represents a risk on the economic forecast in Romania, with potential negative consequences on credit and investment decisions.

Besides a potential negative impact on credit, the impact of the emergency ordinance could lead to much wider consequences. For example, the significant increase of unpredictability for the business environment in Romania could lead to negative impact on investments decisions. The development of investments in 2019 will largely depend on the impact of policies introduced in December 2018 on the banking, energy and telecommunication sectors. The contribution of net exports to the economic growth is expected to remain negative, however progressively smaller in 2019 and 2020, the European Commission’s winter forecast reads.

The European Commission says the European economy will grow in 2019 for the seventh consecutive year in all Member States, by moderate pace, but the future is marked by a high degree of uncertainty.

The EC forecasts that the GDP will grow in the Eurozone by 1.3% in 2019 and by 1.6% in 2020, down against the autumn forecast. The growth forecast in the European Union has also been revised downward, from 1.5% in 2019 and 1.7% in 2020 to 1.9% and 1.8% respectively.

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