Romania had economic growth standing at 4.8% in 2016, generated by domestic demand. We estimate that the cyclical going up of Romania’s economy in the last two years will continue this year too, as well as in 2018, years when the GDP development could stand at over 4.5% in 2017 and 3.5 -3.7% in 2018.
GDP/capita in current prices reached 28% of the European Union average in 2016 compared to 26.4% in 2008, while the standard purchasing power GDP/capita stood at 59% in 2016 against 49% in 2008 against the same average.
In 2016, the annual inflation rate continued its downward trend. According to Eurostat, inflation measured by the HICP decreased to -1.1% in 2016.
Unemployment remained unchanged at around 5.5% in 2016.
Romania’s fiscal standing is sustainable, considering that the budget deficit was 3% of GDP, nonetheless up compared to the 1.5% of GDP in 2015, and that the country’s public debt was under 60% of GDP.
With 37.6% of GDP, the level of public debt is one of the lowest in the EU in 2016, and is estimated to stabilise at below 40% in the medium term. The current account deficit was 1.4% of GDP in 2016.
According to recent forecasts for 2017, the current account deficit is expected to stay between 1% and 2% of GDP.
European funding is still not used to its maximum potential, taking into account that the current absorption rate stood at 89%. The banking community of Romania is interested in actively contributing to improving the general framework of raising European funds alongside all the parties involved, the purpose being to increase the absorption rate of European funds in Romania.
The outlook for 2017 pertains to the soundness of the banking sector across Europe and investors’ trust in the development of emerging states in the context of uncertainties related to growth at global level; here, the expectations are that we will be witnessing the review of the macro-prudential framework.
As regards the vulnerabilities induced by external decisions, we have to take into account Brexit. The AQR test of 2018, the interest rates’ development, the advance of new loans by two digits, a better CRM, the preparation to implement IFRS 9 in 2018 are, next to the challenges induced by external developments, the main concerns of the banking sector for 2017.