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de Adrian N Ionescu , 14.1.2019
Romania’s economy will record an advance of 3.5% in 2019 and 3.1% in 2020, down one percentage point from June 2018 forecast, according to the January edition of Global Economic Prospects biannual report, published Tuesday evening in Washington.
The growth slowdown is expected to continue in 2021, down to 2.8%.
The World Bank also reduced its 2018 GDP forecast by one percentage points to 4.1%, down one percentage point from the June forecast.
At the global level, the economic growth will decline to 2.9% in 2019, following the decrease in investment and trade and the tightening of financing conditions.
As they were affected by financial problems, emerging economies have lost momentum and will have their growth capped at 4.2%.
High risks in Romania and Belarus
The export weakening and the lack of workforce have affected the growth in Bulgaria, Croatia and Romania. In contrast, despite the lack of employees in Poland, the economy of this country has accelerated slightly due to the solid level of consumption and investment.
Romania is among the three states that have been forced to raise the monetary policy interest rates, the other two being Ukraine (in an unusual belligerent situation with Russia) and Turkey (going through a crisis prolonged by an authoritarian political regime).
World Bank economists believe that “the potential for some financial problems is higher in Romania and Belarus, which have large current account deficits and large foreign currency debts.”
The economy has slowed down in Romania as a result of the fact that, as the country is a raw material importer, it had to cope both with the fiscal deficit increase and the current account deficit increase, the same as Pakistan and the Philippines, World Bank report said.
In Europe and Central Asia (ECA), which includes Romania, the economy slowed down to 3.1% in 2018, from 4% in 2017, which shows the economic activity decline in Turkey in the second half of last year.
With Turkey excluded, regional growth remains unchanged at 2.9% in 2018, as the economic slowdown in countries such as Bulgaria and Romania has been offset by the acceleration in the east of the region, which last year benefited from the higher oil prices.