Romania‘s gross domestic product (GDP) will increase by 2.8% in 2022, the European Bank for Reconstruction and Development (EBRD) said on Thursday, lowering its November forecast for 4.4% growth, according to See News.
“Foreign direct investment may be delayed in countries closer to Ukraine, such as Bulgaria and Romania, especially in the context of a militarization of the Black Sea,” the EBRD said in the latest edition of its Regional Economic Update report.
In 2023, Romania’s gross domestic product (GDP) is expected to grow 4.2%. In 2021, Romania’s GDP rose by an annual 6%.
In the South Eastern EU region which also includes Bulgaria and Greece, economic growth is projected at 2.8% in 2022 and at 3.9% in 2023.
GDP growth in all EBRD regions is expected to decelerate to 1.7% in 2022, 2.5 percentage points lower compared to the forecast made in November, as Russia’s invasion of Ukraine has been having a profound impact. In 2023, growth in the EBRD regions is expected to pick up to 5%.
However, the bank noted, projections are subject to an exceptionally high degree of uncertainty, including major downside risks should hostilities escalate or should exports of gas or other commodities from Russia become restricted.
“The war on Ukraine is having a profound impact on the economies in the EBRD regions as well as globally. Inflationary pressures were already high prior to the war and they will certainly increase now, which will have a disproportionate effect on many lower income countries where we work as well as on the poorer segments of the population in most countries,” EBRD chief economist Beata Javorcik said.
The EBRD forecasts assume that a ceasefire is brokered within a couple of months, followed soon after by the start of a major reconstruction effort in Ukraine which will bring GDP by end-2023 back close to, but still below, pre-war levels.
On Tuesday, CFA Romania, an association of investment professionals, said that the economic activity in the country is expected to worsen in the next 12 months because of Russia’s military invasion of Ukraine. CFA analysts’ latest expectations are more pessimistic than those of government, which targets 4.6% economic growth and a cash deficit equivalent to 5.84% of GDP in 2022.