“Gross domestic product growth for 2012 is forecast to be relatively subdued at about 0.8%, with domestic demand as its main driver,” the Commission said in its autumn forecast report.
“In 2013, GDP growth should recover to 2.2%,” it added. Previously, the Commission had estimated an economic growth of 2.9% for 2013.
While investment will likely be the main component behind growth in 2013, the Commission expects it to slow down compared to 2012 due to depressed activity in the rest of the EU and domestic uncertainties.
“Credit activity is forecast to improve only modestly as banks continue to deleverage after a long period of deteriorating asset quality,” the report noted.
However, private consumption is expected to accelerate, albeit at a slow pace because of continuing needs for repairing households’ balance sheets and of tight consumer credit lending standards, the Commission said.
“In 2013, unlike in 2010-12, government consumption is expected to deliver a marginal positive contribution to growth on account of public sector wage increases,” it added.
The Commission expects Romanian annual inflation to exceed the central bank’s target in 2012, after HICP inflation increased to 5.4% in September due to rising food prices and pass-through effects associated with the leu’s exchange-rate depreciation.
“In line with the planned price deregulation of both retail and wholesale sectors, energy prices are expected to exert upward pressure on inflation over the forecast horizon,” the report said.
Romanian annual inflation is projected to average 4.9% in 2013 and 3.3% in 2014.