EBRD Keeps 2014 GDP Growth Forecast For Romania, Warns Of Bad Loans

01.21.2014 By Florentina Dragu

The European Bank for Reconstruction and Development has maintained its forecast on the Romanian economic growth unchanged at 2.4% in 2014, driven by exports and less sluggish domestic demand, but warned of a high ratio of bad loans as well as of external risks from the euro area.

In its latest Regional Economic Prospects report released Tuesday, the EBRD said economic activity in Romania has improved in 2013, largely supported by strong exports and a good agricultural year.

“Fiscal performance has also been good and the country exited the European Commission’s excessive deficit procedure in 2013,” the report noted.

However, growth prospects in the short term continue to be constrained by a weak eurozone. The high level of NPLs at home, which top 20% of total loans, coupled with an ongoing cross-border deleveraging could further hinder economic growth, EBRD said.

The London-based lender estimates Romania’s economy has advanced at an annual rate of 2.5% in 2013, compared with a growth of 2.2% projected in its November report.

For 2014, the growth forecast is unchanged at 2.4%.

Romania’s government estimates the gross domestic product expanded 2.7% in 2013, helped by good exports and a bumper harvest. The authorities in Bucharest expect a growth of around 2.2% in 2014.