The 4.2% economic growth in the first quarter is still high, though much lower than in the previous quarters, analysts say, who are beginning to reconsider their economic growth forecasts for this year.
Consumers have slowed down spending and are less willing to take out a loan due to the significant rise in ROBOR (the reference rate used in setting the interest of the leu loans) from 0.8% to 2.8% in the past six months. At the same time, the decision of Romania’s central bank to raise the key rate three times in 2018 to tackle the inflation that reached 5% has caused even more tension on the market. On the other hand, the increase in industrial output, which accounts for 25% of the GDP, slowed down from 8% to 9% last year to 4% or 5% in 2018, due to the slowdown of the economic growth in the euro zone.
The government built its budget around a 5.2% economic growth.
The Erste group, for instance, on Tuesday adjusted its economic growth estimate for this year from 4.7% to 4.1% right away, while ING Bank revised its GDP growth estimate from 4.7% to 3.5%.
Analysts polled by Reuters estimated 5.4% growth year-on-year. The more alarming is the halt in economic growth quarter to quarter (first quarter 2018 to fourth quarter 2017), compared with 1.26% in the fourth quarter of 2017 to the third quarter, and 2.4% in the third quarter to the second quarter.
“We have stagnation compared with the previous quarter and relatively high economic growth compared with the same quarter last year, but much slower than in the previous quarters. I’d say two types of factors caused it: on the one hand, there were external factors that had to do with the slowdown of the economic growth in the euro zone – the European Union and on the other the internal factors that had to do with the fiscal overhaul,” said Ionut Dumitru, chairman of the Fiscal Council.
Indeed, the data published by EU’s statistics office Eurostat show a visible slowdown in the EU and the eurozone in the first quarter of 2018. The economy of the eurozone and of the 28 EU countries rose by 0.4% in the first quarter of 2018.
(English version by Loredana Fratila-Cristescu)