International Monetary Fund revises downwards to 1% estimates on growth of Romanian economy this year

The International Monetary Fund (IMF) has revised downward its estimates for the growth of the Romanian economy this year, to 1%, from 1.6% as forecast in April and 3.3% as the advance indicated in October of last year, the latest "World Economic Outlook" (WEO) report, published on Tuesday by the international financial institution, reads.The IMF also halved its estimates for the advance of Romania's GDP in 2026, to 1.4%, from 2.8% as forecast in the spring.The international financial institution is also more pessimistic about Romania's progress in reducing its current account deficit, which according to the latest estimates will only shrink to 8% of GDP this year, compared to a decline to 7.6% of GDP forecast in the spring. In contrast, the IMF is more optimistic about the situation next year, when Romania's current account deficit is expected to shrink to 6.6% of GDP, a significantly better performance than a deficit of 7.4% of GDP forecast in April.The IMF also significantly revised its forecasts for consumer price developments in Romania, which are expected to register an annual average of 7.3% in 2025 and 6.7% in 2026. In comparison, in April, the Fund was betting on an average annual price increase of 4.6% in 2025 and 3.1% in 2026 for Romania.As to the unemployment rate in Romania, the IMF indicates that it will increase to 5.9% in 2025, from 5.4% in 2024, to decrease slightly to 5.8% in 2026. In comparison, in April, it was betting on a stabilization of the unemployment rate at 5.4% in 2025 and a decrease to 5.2% in 2026.The forecasts were published on the occasion of the autumn meetings of the IMF and the World Bank (WB), which are taking place this week in Washington.In the case of Romania, the new forecasts are identical to those included in the report presented in September, at the end of the Fund mission's visit to Bucharest.The IMF expects the economy to grow gradually, at a moderate level, on the back of fiscal consolidation. Romania's GDP is expected to expand by 1% in 2025 and 1.4% in 2026, with the acceleration of investments financed by the "NextGenerationEU" program partially offsetting the moderation in private consumption, caused by temporarily high inflation and the effects of fiscal consolidation. Inflation is expected to remain at a high level in the next 12 months, before falling below the BNR's tolerance margin, by the end of 2026, the report presented at the end of the mission's visit to Romania reads.However, even after the revision, the IMF is more optimistic than the World Bank when it comes to the evolution of the Romanian economy. The latest economic analyses for Europe and Central Asia published last week by the World Bank show that the Romanian economy will register an advance of only 0.4% this year and 1.3% next year.In Bucharest, the latest estimates of the National Commission for Strategy and Prognosis indicate a GDP growth of 0.6% this year and 1.2% in 2026.