The IMF also anticipates a GDP growth of 3.8% for Romania in 2024, higher than its previous spring forecast of 3.7%.
The average annual inflation expected by the IMF for Romania is 10.7% in 2023 and 5.8% in 2024. A mission of the Fund in the country ended recently, and its representatives stated that the deficit would be 6% in 2023 and 5% in 2024.
The head of the IMF mission for Romania, Jan Kees Martijn, has recently stressed the need for more measures beyond the Government’s fiscal package. Martijn warned about the impact of turnover taxes on low-margin firms and recommended eliminating tax exemptions, revising property taxation law, and transitioning to a green economy. Martijn insists on putting public finances on a healthy path, with the fiscal package as a crucial first step, and advises continuing system cleaning by removing exemptions.
“The package of fiscal measures is good, but it needs to be improved. The new fiscal package will improve the situation for 2024 in terms of controlling the budget deficit to be maintained at 3% of GDP. The target will not be reached in 2024. Turnover taxes will be a burden on some companies. More work needs to be done on the elimination of loophole tax exemptions and the law on property taxation and the transition to a green economy. Otherwise the results cannot be predictable.It is important for Romania to put public finances on a healthy path. The fiscal package will be an important first step in this direction. Our advice is to continue cleaning the system by removing exemptions. That would be the direction of our advice”, Jan Kees Martijn said about Romania’s recently adopted bill on tax measures.
In its report, the IMF also upheld its global GDP growth prediction at 3% for 2023 and slightly decreased the forecast for 2024 to 2.9%, down by 0.1 percentage points. At the same time, it adjusted its world trade growth volume forecasts, lowering this year’s prediction from 2% to 0.9% and next year’s from 3.7% to 3.5%.
In terms of individual economies, the IMF revised its projections for various nations. The US economy is predicted to grow by 2.1% this year and 1.5% next year, marking an increase from earlier estimates. China and Russia are expected to see their economies expand by 5% and 4.2%, and 2.2% and 1.1%, respectively, in the same period. However, Germany’s economy is anticipated to contract by half a percentage point in 2023 before recovering with a growth of 0.9% in the following year, both predictions showing a decline from previous expectations.
The eurozone is set to see a growth of 0.7% in 2024 and 1.2% in the subsequent year, both figures being lower than earlier estimates. Meanwhile, emerging markets are projected to grow at a rate of 4%, marking a slight dip from the previous forecast of 4.1% for the year 2024, the report also reads.