Garanti Bank: GDP to be higher than expected in 2014

Romania′s GDP growth rate is expected to reach 2.9 per cent by the end of the year, rather than 2.6 per cent as the first estimates made in Q1, according to the latest Quarterly Macroeconomic Report by Garanti Bank, corresponding to Q2 2014

2014-08-09 00:16:41 - From the Print Edition

This is due to higher than expected results in Q1, as well as to an overall positive outlook for Romania's economic development, with stabilized macro environment, cheaper financing and improved business sentiment that might attract investors.
According to the same report, some deceleration of the growth in the industrial production sector is anticipated in the next quarters of 2014.
Meanwhile, after it contracted in the first quarter of the year and also registered poor performances in 2013, the construction sector is expected to recover.
Moreover, public investments and EU funds absorption are lagging much behind expectations of the desired level, read the report.
However, a significantly better performance of investments is expected in the rest of 2014, especially in the infrastructural works segment.
"The anticipated improvement of the investments is based on the projects financed with EU funds, especially those in the transportation segment," said Rozalia Pal, Chief Economist at Garanti Bank.
"As for the dynamic of the exports, a slowdown is expected for this year, given that the exceptional production of transport equipment and machinery during 2013 will actually work as a negative base effect for 2014. In regards to the imports, some acceleration can be expected on the back of the rebound of domestic demand."
Moreover, Pal added that, overall, these elements should not impact significantly the current account deficit, which should remain at around 1.1 per cent of GDP in 2014, being more than 100 per cent covered by the FDI.