BNR projections: Economic growth decelerates considerably in 2022 and 2023

Economic growth will considerably decelerate in 2022 and 2023, more pronounced than expected, according to the minutes of the central bank leadership talks, released on Monday. Inflationary expectations of companies are rising, amid the trend of eroding consumer purchasing power.   During the meeting, the Board of the National Bank of Romania discussed and adopted the monetary policy decisions, based on the data on and analyses of recent macroeconomic developments and the medium-term outlook submitted by the specialised departments, as well as on other available domestic and external information.   Looking at the recent developments in consumer prices, Board members showed that, in December 2021, the annual inflation rate had climbed above expectations, to 8.19 percent from 7.80 percent in November, rising even higher above the variation band of the target and adding 6.13 percentage points from the end of 2020. 80 percent of the advance seen in 2021 had come, however, from the increases in natural gas, electricity and fuel prices, while half of the contribution of only 15 percent made by core inflation had been attributable to processed food, Board members remarked, underlining the much more modest rise in the annual adjusted CORE2 inflation rate to 4.7 percent in December 2021, from 3.3 percent in December 2020. It was emphasised yet again that inflation developments in Romania had been driven by global supply-side shocks, which had triggered a steep upward movement of inflation worldwide in 2021, way above central banks’ inflation targets, including in numerous European countries. On the domestic front, their impact had been compounded by the liberalisation of the electricity market for household consumers at the beginning of 2021, several Board members reiterated.   (Details on :https://www.bnr.ro/Minutes-of-the-monetary-policy-meeting-of-the-National-Bank-of-Romania-Board-on-9-February-2022---23913.aspx)