The 2014 figure represents a slight improvement compared with a 2.1% growth previously estimated, but it falls significantly short of an economic increase of 3.5% recorded in 2013.
“Real gross domestic product growth in 2013 has come out at 3.5% thanks to a strong export performance driven by a robust industrial output and an abundant harvest,” the Commission said in its winter forecast report.
Economic growth is projected to remain above potential in 2014-2015, reflecting “improved confidence and more supportive international conditions but also the payoff of product and labor market reforms implemented under the financial support programs.”
The Commission expects investments will regain momentum in 2014, supported by better absorption of EU funds.
Domestic demand and imports are seen gradually recovering in the 2014-2015 period, while the growth contribution of net exports is estimated to fade out in 2014 and turn negative in the following year.
“This follows a strong trade balance adjustment of 4.1% of GDP in 2013, on account of both strong exports and subdued imports,” the Commission said.
The budget deficit is forecast at 2.2% of GDP this year, from 2.6% of GDP estimated for 2013. Both imbalances are slightly higher than initially projected, reflecting increased co-financing expenditure to support EU fund absorption.
“For 2015, benefiting from the expected acceleration in economic activity and based on the customary no-policy-change assumption, the deficit is projected to decrease further, to 1.8% of GDP,” the report noted.
Potential risks to Romania’s budget deficit projections include a less tax-rich growth associated with weak domestic demand, reduced expenditure control and limited progress with restructuring of state-run companies, the Commission said.