“The fourth quarter will be very bad as Europe is reinstating pandemic-related containment measures. We might see an economic contraction in the fourth quarter, which means the economic rebound will not be V-shaped but likely W-shaped. If a 5% contraction for 2020 seemed pessimistic in the past, it looks highly optimistic now,” said Ionut Dumitru, chief economist at Raiffeisen Bank.
“The long-awaited V-shaped growth pattern will look a lot flatter than hoped for, meaning that the recovery path will be slower and longer lasting. We maintain our 2020 GDP growth forecast at -5.5% and revise next year’s growth from 5.2% to 4.1%,” ING economist Valentin Tataru said in an e-mailed note.
Erste also revised its rebound projection for 2021 and now sees it at 2.7% from 3.9% previously.
“Given the newly enacted restriction measures after the resurgence of the Covid-19 spreading, the prospects for the fourth quarter are worse versus our initial scenario. Nevertheless, fourth quarter doesn’t change much of the picture this year and we reaffirm our full-year real GDP forecast at -4.7. However, we revise downwards the expected recovery in 2021 to 2.7% from 3.9% previously, considering the significant carry-over effect of fourth-quarter real GDP for next year’s growth numbers and likely slower growth in the first quarter of 2021,” Erste analyst Dorina Ilasco said in an e-mailed note.
On the other hand, Romanian finance minister Florin Citu reaffirmed confidence in a V-shaped recovery as the economy grew 5.6% quarter-to-quarter and the country avoided a technical recession after a sharp GDP drop in the second quarter.
However, Romania’s GDP dropped 12.2% in the second quarter compared with the first and third-quarter growth recouped less than half. In the first three quarters of 2020, Romania’s GDP contracted by 5.1% and by 4.6% in real terms.
Romania’s government currently expects a 3.8% GDP contraction for the full year, compared with -5% forecast by the EBRD, -4.8% seen by the IMF or -5.2% forecast by the European Commission.