SIMILAR ARTICLES

85% (!) Increase in current account deficit in 2017: Short-term debt increases, foreign investment stagnates

The current account of the balance of payments recorded a deficit of EUR 6.464 billion last year, 85% higher than in 2016. The minus registered… Mai mult

Inflation reached 4.32% in first month of 2018. Explanations and what is to be expected

Romania recorded a 0.78% price increase in the first month of the year compared to the previous month, which led to an inflation rate of… Mai mult

Reform in ANAF has stalled. World Bank: There is no political commitment to reforms

Romanian taxpayers waiting for ANAF reform The World Bank found that ANAF’s modernization process stalled immediately after the first stage of the acquisition of the… Mai mult

Research domain: if private sector does not finance it, state does not stimulate it. A few comparisons with other countries from East being in this suffering

Romania ranked last year second to last among the EU member states in terms of R&D expenditure as a share of GDP. With only 0.48%,… Mai mult

Romania – highest financing costs among ECE states: prospects of vulnerability increase and accentuation

  The financing costs of Romania and Hungary have increased, while costs of other Central European countries have maintained steady in the last week –… Mai mult

Winter forecast: CNP radically adjusts economic growth. Observations on game of deficit, exchange rate, inflationv

de Marin Pana , 12.2.2018

The National Prognosis Commission (CNP), an institution under the government authority, radically changed the economic growth for 2017, from 6.1% in last autumn forecast to 7.1%, according to the winter forecast, which has been released at the end of last week.

As data on the growth in the first three quarters of the previous year are already published by the INS, almost a doubling of the growth value for the fourth quarter of 2017 suddenly resulted from the change announced by CNP, from around 4%, or how much it would have been needed for the average of 6.1% previously announced, to 7.3%, or how much the INS would soon announce if the CNP projection will be true.

*

  • Evolution of the economic growth in 2017
  • Quarter
  • Autumn forecast
  • Winter forecast

*

Please note that we have used a 70% spread for the first nine months and 30% of the annual result for the fourth quarter, in line with the practice of recent years for calculating the GDP, as the reality indicates a share corresponding to the GDP in the last quarter of the year significantly higher than one quarter of the total.

All in all, we had the biggest revision of the economic growth from a historical perspective, since the autumn of 2016, from + 4.3% then, to + 7.1% today and from RON 807.4 billion, the 2017 GDP nominal value then to RON 853.2 billion now.

That is, more than the level of RON 842.5 billion used in the second half of last year, in the releases issued by the Ministry of Finance, including for the presentation of the budget deficit percentages.

According to the new GDP estimated by the CNP, it should decrease from 2.88% of GDP to 2.84% of GDP and the space available for falling within the 3% threshold by the ESA European standard increases by one-third of one billion lei.

Revision for 2018: and … also upwards

Surprisingly, although the reporting base given by the 2017 result has significantly increased, the economic growth used for drafting the 2018 budget has been already revised, ALSO upward, from 5.5% in the previous autumn forecast to 6.1% now. This is instead of 4.5%, as it would have been normal if the 2018 GDP had maintained at the level forecasted only three months ago and had been related to the new estimate for 2017.

As they continued to keep the growth rates for the period 2019 – 2020 (regardless of the increase in the economic advance between 2017 and 2018 from 11.9% cumulated for two years to 13.6%), in 15 months of successive forecasts, it has been reached to changing the 2020 GDP from RON 977.2 billion to RON 1,072.2 billion, which means a plus of almost RON 100 billion.

How to explain these increases

But how are these successive and unlikely increases can be explained in this indicators that evaluate based on a “chain reaction”?

While for the result in the fourth quarter of 2017 the trend confirmed by the practice of previous years can be invoked, according to which the evolution in the last quarter of the year would be very close to the result for the first three quarters, questions arise regarding the consumer price index and the exchange rate.

More specifically:

CNP forecasts an end-of-year inflation rate of only 2.6% at an average of 3.7%. The average seems plausible and compatible with the range estimated by BNR, namely 3.9%, 3.8%, 3.5% and 3.2% on the four quarters of 2018, but the level of 2.6% appears to be a quite a fantasy, precisely because the average is 3.7%.

Furthermore: right after the beginning of the year, the exchange rate used in the 2018 forecast has been updated, for now from 4.55 lei/euro, a value that is already ridiculous in the current context, to 4.59 lei/euro. For now, because the value of 4.46 lei/euro initially announced as the average for 2017 has been also increasing successively toward 4.56 lei.

The first two decimals have been maintained following major efforts, which can only be discreet, and the result of 4.5681 lei/euro has preserved the credibility of the authorities overall.

But replicating the history in 2018 already suggests that we are preparing for further successive re-evaluations of the average exchange rate (and may the Lord grant that it is only about ten extra bani, the same as in 2017).

Otherwise, since last fall, CNP has lost its good habit of presenting the GDP forecast in euro as well (the currency we took the commitment to adopt, sooner or later, when joined the EU). This may explain, even partially, from where the extra RON 100 billion estimated for the 2020 GDP come.

The question is whether it will still be possible to gather, in an honest way, the extra billions of lei of tomorrow with the ones of today and whether the growth rates of tomorrow will be as much linked to concrete achievements, translated into the living standard, as yesterday (a closer or more distant yesterday). This is also true for the pension and salary incomes, because, as they say, it is not always the size that means everything.

Mergeți în homepage ›

Publicat la data de 12.2.2018

Lăsați un comentariu


NEWS

"SOS" letters sent by business community to state institutions: Reform ANAF!

The member organizations of the Coalition for Romania's Development (CDR) urge the Government that the reform of ANAF should become one of the "top" priorities… Mai mult

Government has approved procedure for acquiring four multifunctional corvettes built in Romania and asks US Government to sell long-range ballistic missile to it

Romanian Government approved Thursday two decisions on the national endowment programs - "Multifunctional corvette" program and "Multiple long-range ballistic missile launcher system" - HIMARS. According to… Mai mult

Transgaz to participate in Eastring gas pipeline along with Slovak counterpart Eustream

The operator of the national natural gas pipeline Transgaz (TGN) and Eustream, its Slovak counterpart, signed a memorandum of understanding "to investigate the opportunities to… Mai mult

AOAR: Solutions to imbalances produced by chaotic tax legislation - business environment reaction to a slander from a minister

The Businessmen's Association of Romania (AOAR) proposes a series of solutions to get out of the "chaos" of the fiscal and revenue legislation adopted last… Mai mult

Government has approved OUG to preserve income of IT and part-time employees

The Government approved on Thursday the OUG comprising the measures needed to preserve net wages that professional groups exempted from income tax and part-time employees… Mai mult

EBRD: Romania needs to change its economic growth model. Better "sooner than later"

Romania needs to adopt a different economic model if it wants to avoid a crisis caused by the current consumption boom, according to Matteo Patrone,… Mai mult

INS - Context survey: stability or even stagnation, employees about the same but all prices up!

According to the perception of managers from the field, the manufacturing industry will register a relative stability of production volume in the following months (conjuncture… Mai mult

Romanian Business Leaders: List of "signs of distrust" in economic year 2018

The Romanian Business Leaders (RBL) Macroeconomic Confidence Index, of 52.3 points, shows that the entrepreneurs and executives from the most important businesses in Romania have… Mai mult

OLAF runs investigation at Metrorex - possible overpriced payments at Metro Line 5

UPDATE: In a statement issued to RFI, OLAF confirmed the investigation at Metrorex, and its topic - the Metro Line 5 (M5) financed by European… Mai mult

Government goes on Eurobond market and attracts over EUR 3 billion. Complicated yields

The Ministry of Finance is trying to take advantage of the still favourable conditions for emerging government securities and goes on the Eurobonds market with… Mai mult

MFP: Government will borrow RON 74 billion in 2018, only through government bonds

The total volume of loans planned by the Ministry of Finance (MFP) for 2018 amounts to about RON 74 billion. Loans are to be secured… Mai mult

Pessimistic expectations about the future in latest CFA Romania research - economists anticipate a decrease of personal incomes and continuous depreciation of Romanian leu

In December 2017, the macroeconomic confidence indicator of CFA Romania declined to 41 points, the lowest value since April 2013, by 3.1 points below the… Mai mult

Second largest bank in EU, BNP Paribas, opens its branch in Bucharest

BNP Paribas, the largest French bank and the second largest in the EU by the size of assets, will launch its retail operations in Romania… Mai mult

Three options by which BNR intends to moderate lending

The BNR will impose restrictions on credits to the population, to anticipate potential non-payment risks. This could happen in March if the project is approved… Mai mult

Siegfried Muresan: Amendments to Romanian laws on judicial will be discussed in European Parliament

The European Parliament will run debates on the situation of justice in Romania in the next plenary session, in February, in the Strasbourg plenary. The… Mai mult