February 15 (SeeNews) - The European Commission said on Thursday it has revised its estimate for Romania's economic growth in 2024 to 2.9% from 3.1% projected in the autumn.
For 2023, the Commission revised its estimate to 1.8%, 0.4 percentage points (pp) lower than in its autumn forecast, the EC said in its latest macroeconomic forecast. The slowdown was primarily due to high inflation, weak private consumption, and lower inventories, it explained.
While external demand also played a role, strong investment in public infrastructure, funded by the European Union, helped bolster growth. A resilient labour market and rising minimum wages further mitigated the decline in real disposable incomes, the EC said.
Romania's economy is expected to regain momentum in 2024, fueled by stronger private credit growth, increased real disposable incomes, and an improvement in external demand. While private consumption is anticipated to accelerate, investment will remain the key driver of growth.
Inflation is projected to ease gradually over the upcoming months. After peaking at 12% in 2022, it declined to 9.7% last year and is expected to average 5.8% in 2024 before further dropping to 3.6% in 2025. The disinflationary trend is attributed to tighter monetary conditions, lower energy and food prices, and slower private credit growth.
The EC also said that monetary policy will remain tight this year, relaxing only gradually as inflationary pressures ease. This, coupled with stronger external demand, is expected to support further economic growth of 3.2% in 2025, slightly below the previous forecast.
In the European Union, GDP is expected to grow by 0.9% in 2024 and expand by 1.7% in 2025, while the Euro area's economic growth is projected at 0.8% and and 1.5% in 2024 and 2025, respectively.
Romania's finance ministry analysts said earlier this month that economic output is expected to rise by an estimated 3.4% in 2024, and by 4% in 2025.