For 2015, the Commission estimates an increase of 2.6%, also slightly higher than a growth of 2.5% initially projected.
“Romania’s economy beat expectations by growing as much as 3.5% in 2013. Growth is set to slow, but it is projected to remain above potential over the forecast horizon thanks to improved confidence and more supportive international conditions, thereby further reducing the still negative output gap,” the Commission said in its spring forecast report.
The Commission expects investments will regain momentum in 2014, supported by better absorption of EU funds. Additionally, domestic demand is forecast to gradually overtake net exports as the main driver of growth.
Private consumption is estimated to recover modestly as consumer confidence improves and disposable income increases on account of higher real wages, the survey showed.
“At the same time, credit growth, which was in negative territory in 2013, is expected to remain constrained by the ongoing deleveraging of households and banks,” the Commission said.
The budget deficit is forecast at 2.2% of the gross domestic product this year, from 2.3% of GDP in 2013.
“In 2015, based on the customary no-policy-change assumption, the deficit is projected to decrease further to 1.9% of GDP, as revenues improve moderately, in line with the gradual switch towards stronger domestic demand as the main driver of growth,” the survey noted.
Potential risks to Romania’s budget deficit projections mainly relate to expenditure control around elections and tax collection.