BCR, a unit of Austria’s Erste Group Bank (EBS.RO), had previously estimated a GDP growth of 2.3% in 2014 and 3.3% in 2015.
In September, Prime Minister Victor Ponta stated that Romania should spend over $3 billion on public investments by the end of the year, but the funds, covered from the state budget, are difficult to spend due to procedural bureaucracy.
The convergence report submitted by Romania to the EC in the spring envisages a headline budget deficit of 1.4% of GDP in 2015 and a structural budget deficit of 1% of GDP, but BCR analysts consider it as “an ambitious fiscal consolidation”.
“We are skeptical that this will be achieved, as PM Ponta last week said that Romania wants to ask the EU to accept a budget gap of 2% of GDP in 2015,” according to the report.
According to BCR, no additional details about the 2015 state budget have emerged so far, as all eyes are on the presidential election scheduled for November 2.
“Besides that, Romania has a long-lasting tradition of approving state budgets in the Parliament only in January or February,” the report reads.
The government set a deficit target of 2.2% of the GDP for this year.
BCR estimates that CEE countries that have already brought their deficits below 3% of GDP, like Romania, Hungary, the Czech Republic and Slovakia, are looking to slow down their fiscal consolidation, while Croatia, Slovenia and Serbia face tough austerity measures.