Research Detail
| 2023/06/20 / Erste Group Research |
Economy is going through soft patch After a much better than expected performance last year, we expect GDP growth to decelerate this year to 2.1%, from 4.7% in 2022, and rebound back toward its potential of around 4.0% next year. Our growth forecast is at the lower end of the consensus range for this year (2.5% Bloomberg median) and above-consensus for 2024. Investments should continue to significantly support GDP growth this year, financed by EU funds, which are expected within 4-5pp of GDP in 2023, from the overlapping of the previous Multiannual Financial Framework and the Recovery and Resilience Facility. Household demand should remain the main contributor to GDP growth, though to a lesser extent vs. 2022, with real wage growth already turning positive at the end of the first quarter. The shift to investment-driven growth from consumption-driven, which started in the second half of last year, is expected to continue in 2023. With fading inflationary pressures and the end of rate hiking cycles in the CEE region, we expect the NBR to keep the key rate unchanged at 7.00% throughout 2023. Liquidity management, the NBR’s favourite policy tool, is likely to remain a function of the EUR/RON and inflation readings over the coming quarters. We see the first rate cut by the NBR in 3Q24, against the backdrop of a still-challenging inflationary environment. While the decline in inflation from the November 2022 peak to single-digit territory could take three quarters, bringing it inside the NBR’s target range is likely to take an additional nine quarters. |
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General information
| Author | Erste Group Research |
| Date | 2023/06/20 |
| Language |  |
| Product name | CEE Country Macro Outlook |
| Topic in focus | FX, Macro/ Fixed income |
| Economy in focus | Romania |
| Currency in focus | Romanian Leu |
| Sector in focus | - |
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