The budget, he said, is built around a 5.5% economic growth and a budget deficit of no more than 3% of the GDP. The GDP should therefore reach 1,022 billion lei (almost EUR220 billion). The 2018 GDP forecast was raised from RON908 billion at the beginning of the year to RON946 billion in November due to the GDP deflator.
Economists agree that 5.5% growth is not unattainable in 2019 but believe it will be difficult, considering Romania is now beyond the economic cycle peak of 2017. Therefore, they expect the government to explain where exactly the growth will come from. The finance minister hinted it would come from investment.
“Their idea is that they will replace consumer spending with investment. And with support from the pension law that will improve purchasing power of retirees, they could get hefty growth. But I am pessimistic, especially when I see what’s going on in Europe, where economies are slowing down,” economist Laurian Lungu commented.
Economist Dragos Cabat does not believe in the government forecast, although he does not challenge. it.
“You can’t say the 5.5% growth target is wrong, it’s just a forecast. I don’t buy this investment story, investments have never been made and I don’t see why they would be next year. There is no money for that, because you’ve taken on social spending. I see a very difficult 2019, not only in Romania but also in Europe.”
The growth forecasts of the government have turned out to be cautious and accurate in the past five years (2013-2017), and the economy grew more than expected when devising the budget. for instance, the 2017 budget was built around 5.2% growth, but the GDP actually grew by 6.9%. Why would not something like that happen in 2019, as well?
The finance minister is very optimistic:
“We are making history. We have about RON1,022 billion estimated GDP for next year. We expect a 5.5% economic growth. We want to go with a much lower deficit that in 2018. It is an obligation we are undertaking before the European Commission,” Teodorovici was quoted as saying by Mediafax.
(English version by Loredana Fratila-Cristescu)