The board members of the National Bank of Romania (BNR) estimate a stronger-than-previously-projected moderation of economic growth in 2018, followed however by a renewed pick-up in 2019, according to the new medium-term forecast, presented in the minutes of the monetary policy meeting of the board on 6 August 2018.

“Assessing the likely pattern of excess aggregate demand, Board members noted that the new medium-term forecast anticipated a stronger-than-previously-projected moderation of economic growth in 2018, followed however by a renewed pick-up in 2019, and hence by a return of its annual rate towards potential,” the central bank said.

The outlook implied a marked abatement, also in relation to the previous forecast, of the expansionary nature of the fiscal policy in 2018, which was then seen becoming neutral in 2019, the board members indicate.

The moderation of economic growth is mainly due to the deceleration in the dynamics of households’ real disposable income.

Romania’s gross domestic product (GDP) has increased by 4 percent year-on-year in the first quarter of this year, compared with 6.9 percent in 2017.

On Tuesday, the flash estimate showed that the GDP rose by 4.1 percent year-on-year and by 1.4 percent quarter-on-quarter in the second quarter of this year.

“Some Board members considered that evolution to be a welcome return towards the potential rate of economic growth, since it implied a contraction in excess aggregate demand,” according to the BNR minutes.

The board members observed some differences in the composition of economic growth drivers on the demand side, with a slight downward correction in the prevailing, albeit diminishing, contribution of household consumption and a slight upward revision of the decreasing positive contribution of gross fixed capital formation.

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