“In 2014 we will see Romania’s robust export performance registered last year feeding through into higher wages, lower unemployment and increases in disposable income,” the local unit of Turkey’s second largest bank Garanti Bankasi said in its quarterly macroeconomic report released Tuesday.
The bank also revised its year-end outlook on the leu’s exchange rate to 4.45 per euro, from 4.55 per euro initially estimated.
“Depreciation risks are still related to the regional development in connection with the potential worsening of the Ukrainian-Russian conflict,” the report noted.
Garanti Bank expects industrial output will grow at a slower pace in the following quarters compared with the first three months of 2014, with the decline to be partly offset by a recovery in the construction sector.
“Public investments and EU funds absorption are lagging much behind expectations and acceleration is expected mostly in the second half of the year,” the report showed.
Garanti Bank forecasts further slowdown in the export growth for this year, “given that the supply shocks during 2013 will actually work as a negative base effect for 2014, while some acceleration in imports can be expected on the back of the rebound of domestic demand.”
“Overall, this should not impact significantly the current account deficit with around 1.1% of the gross domestic product in 2014, just as in 2013,” the report noted.
The lender estimates foreign direct investment will reach some EUR3 billion this year, equal to 2% of GDP.