Romania: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Romania
IMF Staff Country Reports, June 6, 2018
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- Romania: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Romania
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Bibliographic details
- Published: June 6, 2018
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781484359495.002
Overview
- Romania recorded strong economic growth in 2017, with record low unemployment and an improving financial sector.
- Growth in 2017 was led by private consumption boosted by fiscal stimulus and wage increases, while investment lagged and structural reforms slowed.
- Public investment fell to a multi-year low in percent of GDP with a low absorption of European Union funds.
- Both the government deficit and current account deficit widened, respectively to 2.8 and 3.4 percent of GDP in 2017.
Key findings (2017)
- Strong economic growth driven by private consumption.
- Record low unemployment.
- Improving financial sector.
- Fiscal stimulus and wage increases were major drivers of private consumption.
- Investment lagged; structural reforms slowed.
- Public investment fell to a multi-year low in percent of GDP.
- Low absorption of European Union funds.
Fiscal and external balances
- Government deficit: 2.8 percent of GDP in 2017.
- Current account deficit: 3.4 percent of GDP in 2017.
- Public investment share of GDP: fell to a multi-year low (exact percent not specified in source text).
- European Union funds absorption: characterized as low.
Projections and macroeconomic outlook (2018)
- Growth is expected to reach 5 percent in 2018—led again by continuing stimulus to private consumption from fiscal relaxation.
- Outlook characterized by a continued current account deficit and elevated inflation.
- Monetary policy: tightened in response to elevated inflation pressures.
Policy implications and priorities (implied by findings)
- Address reliance on fiscal stimulus and wage-driven private consumption to sustain balanced growth.
- Strengthen incentives and capacity to increase public investment and improve absorption of European Union funds.
- Reinforce structural reforms to boost investment and potential growth.
- Monitor fiscal and external deficits given widening in 2017 (2.8 percent and 3.4 percent of GDP, respectively) and projected continued current account deficit in 2018.
- Calibrate monetary policy tightening to contain elevated inflation while considering growth dynamics.
Romania: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Romania
Content in this bundle
- Country Report