“After export-led growth in 2011, activity is expected to become more broad-based in 2012 as the increase in exports spills over into domestic demand,” the Commission said in its autumn economic forecast released Thursday.
External demand is expected to remain supportive but to be less robust in 2012 due to the worsening economic outlook in Europe and other parts of the world, the report noted.
Private consumption is poised to pick up in the second half of 2012, contributing 1.9% to the gross domestic product growth.
On the other hand, government consumption is not expected to contribute much to growth in 2012 as it is constrained by the need for further fiscal consolidation and the continued reduction of public sector employment.
For 2013, the Commission expects Romanian economy to expand to 3.4%, around 1 percentage point above earlier estimates.
The country’s inflation rate is estimated at 3.4% in 2012, within the central bank’s target range, the Commission said.
However, the temporary downward pressure on headline price indices stemming from volatile food prices may reverse in the second half of 2012, it noted.
Main upside risks to the inflation outlook relate to prospects for sizeable upward adjustments in administered prices (in particular of electricity, gas and other utilities), the Commission said.
Conversely, deteriorating global economic conditions, including lower commodity prices, would have a disinflationary effect.