Gov’t estimates: Romania’s GDP growing 1 pct, inflation average at 3.4 pct

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Romania’s GDP this year will be 1 pct higher compared to 2011, and the average annual inflation will be 3.4 pct, according to estimates in a report on the economic and budget situation in the current year, posted on the government’s website.

The forecast for the 2012 macroeconomic indicators is based on the results in the first half of 2012 and on expected developments for the other EU countries, reads the document.

The government said that in the first half of this year, the GDP growth in real terms has been 0.7 pct compared to H1 2011. The domestic demand advanced 1.3 pct from the first half of 2011 as an effect of the 0.8 pct rise in final consumption and the 14.3 pct increase in the gross fixed capital formation.

Domestic demand is expected to improve in H2 following the increase in the wages of public employees and in net income from pensions, as well as under the positive effect of public investments.

The gross domestic product will increase this year by approximately 1 pct compared to 2011, reaching a nominal value of 607.3 billion lei, the cited source mentions. According to the report, growth is driven by domestic demand, with its components: final consumption that is seen growing by 0.7 pct, and the gross fixed capital formation that will go up by 6.4 pct.

„Considering the evolution of the foreign trade in the first 8 months of 2012 (an advance of 0.7 pct for exports and of 1.2 pct for imports, respectively), exports of goods are expected to go up 2.1 pct in 2012 whereas imports are seen advancing by 2.0 pct,” the government report shows.

The government also estimates inflation will grow to about 5 pct by year-end due to the adverse effects of drought on food prices, while the average annual inflation is estimated at 3.4 pct.

The external current account deficit is expected to narrow to 4 pct of GDP in 2012, as capital inflows will further stay low, the report said.

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