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EBRD raises Romania’s 2021 economic growth forecast to 6%

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European Bank for Reconstruction and Development (EBRD) said on Tuesday that Romania’s gross domestic product (GDP) will increase by 6% in 2021, improving its September forecast for a 3% growth, according to seenew.com

Romania’s GDP for 2022 is expected to grow 5%, as the Recovery and Resilience Facility should start boosting investments, the EBRD said in the latest edition of its Regional Economic Prospects report.

The EBRD explained that the economic growth in 2022 will also be fuelled by private consumption and higher net exports, adding that the key downside risks to the forecast stem from the evolution of the coronavirus pandemic.

“Romania weathered the Covid-19 crisis better than initially expected, as GDP fell by 3.9% in 2020. Overall, private consumption had the steepest decline in 2020 of 4.9%, while resilient investments and improved net exports had positive contributions to growth,” said EBRD.

In the last two quarters, the Romanian economy has expanded at a robust pace, as containment measures had a limited impact on economic activity.

According to the EBRD, in the first quarter of 2021, GDP reached pre-pandemic levels in adjusted terms, signalling a strong momentum for short-term recovery driven by domestic demand.

On the external front, goods exports already recovered by the end of 2020 but momentum weakened in the first quarter of 2021, most likely reflecting supply shortages in manufacturing, while service exports recovered to pre-pandemic levels in the first quarter.

Unemployment remained moderate at 5.7% in April 2021, compared with 3.9% at end-2019.

Inflationary pressures increased at the start of 2021 due to the liberalisation of the electricity market and recovering global energy prices, with inflation reaching 3.8% in May 2021,” stated the EBRD.