“We believe the budget deficit will be at around 3.8% of the gross domestic product in ESA95 terms,” BCR analyst Eugen Sinca told reporters Thursday.
The authorities in Bucharest want to reduce the budget gap to below 3% of GDP in 2012, from 4.3% of GDP in the previous year.
In 2013, Romania’s budget deficit is expected to narrow to 3.3% of GDP, Sinca said.
BCR forecasts an annual inflation rate of 4% in December 2012, at the upper end of the central bank’s target band of 2% to 4%, and estimates the leu will trade at 4.4-4.6 against the euro by year-end.
“We have raised our estimation for the year-end inflation mainly due to the weak harvest predicted for this year,” said Sinca.
Previously, BCR estimated the annual rate would reach 3.7% in December.
A weaker leu and the higher natural gas prices to be charged as of September will also increase inflationary pressures, the bank said.
“The annual rate could accelerate to 4.1%-4.2% in September, while the year-end rate is expected to come in at around 4%, maybe even 4.2%,” said Sinca.
Romania’s inflation rose for a second straight time to 3% in July, largely driven by higher prices in the service and non-food sectors.