Page 59 - SE Outlook Regions 2022

Romania’s economic growth eased to 7.4% y/y in the third quarter of
2021 from 13.9% y/y in Q2, while the average annual growth rate for
the January-September period was 7.1% y/y.

In its Autumn Forecast, the Commission slightly altered its forecast for
Romania’s growth outlook, largely shaped by the Recovery and
Resilience Programme. The 2021 growth forecast was revised slightly
downwards to 7% (from 7.4% in the Summer Forecast) while 2022’s
projection was revised upwards to 5.1% from 4.9%.

“Whereas the effect of pent-up demand on private consumption is
expected to fade out [in 2022-2023], growth is set to remain positive
thanks to growing employment, falling inflation and robust wage
growth,” the Commission said.

2.9.2 External environment

Romania’s current account deficit in the 12-month period to October
2021 widened by 57% y/y, reversing a small 7% y/y contraction posted
for the comparable period to October 2020.

Overall, the country’s external deficit in the 12-month period to October
deepened by 46% compared to two years earlier (taken as a
benchmark for avoiding COVID-19 base effects), to €16.0bn.

The current account deficit-to-GDP ratio thus hit 6.9% in the 12-month
period, sharply up from 4.7% in the 12 months to October 2020 and
5.0% in the period to October 2019. This is above the EC’s forecast for
a 6.5%-of-GDP current account gap in 2021, followed by 6.3% in 2022
and 6.1% in 2023. The Romanian authorities are slightly more
optimistic. Notably, most of the money under the Resilience Facility will
enter the capital account of the balance of payments, thus financing the
current account gap that is likely to remain wide over the period of
implementation of the European Union’s programme.

The deficit of the trade with goods was the main element of the current
account balance and it hit €22.3bn or a 9.5% of the GDP deficit in the

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