ING Bank analysts slash their Romania 2024 economic growth forecast as strong domestic activity dissipates through imports
<p>Romania is failing to capitalize on strong positive private consumption and investments because of rising imports, which weigh visibly on economic growth, <a href="https://think.ing.com/snaps/romanian-gdp-slowdown-confirmed/?utm_campaign=September-06_romanian-gdp-slowdown-confirmed&amp;utm_medium=email&amp;utm_source=emailing_snap&amp;M_BT=12012607">ING Bank analysts wrote in a note</a> as they lowered their 2024 growth forecast from 2.0% to 1.3% on Friday, September 6.</p>

<p>The detailed economic growth data for the second quarter, released by the statistics office INS on Friday, confirmed the 0.8% GDP growth rate in Q2. The growth was largely supported by higher private consumption and investments, but consumption growth also boosted imports, which negatively impacted the overall number.</p>

<p>“It's clear that strong private consumption momentum and loose fiscal policy are generating a stimulus that is spreading primarily outside the local economy to the benefit of the country’s trading partners. While there is also a rapid investment boom, consisting of multiple large-scale projects with tight deadlines, this is also showing up in higher imports as the local supply side cannot match the demand,” ING analysts explained.</p>

<p>They believe that Romania’s structural supply-demand imbalances still have a long way to go before they can improve. “We don’t see room for major structural improvements in either the dissipation of the strong internal demand through imports or in higher external demand from key trading peers,”</p>

<p>ING analysts also believe that the chances of one more rate cut from the NBR in the fourth quarter have increased, given the weak GDP growth.</p>

<p><em>editor@romania-insider.com</em></p>

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