The Romanian economy is forecasted to grow by 2.7 percent in 2024, driven by public investment and private consumption, according to iBanFirst, a provider of foreign exchange and international payment services [f223f50b]. This growth projection is an improvement from the previous year's 2.0 percent. The main drivers of growth will be public investment and private consumption. However, iBanFirst is concerned about Romania's elevated deficit, which currently stands at 5.6 percent of GDP. The company believes that the next government should make efforts to significantly reduce the deficit [f223f50b].
In terms of inflation, iBanFirst analysts expect it to remain around 5 percent by the end of the year and only reach the central bank's target of 4 percent in 2026. This reduces the possibility of rate cuts in the near future. iBanFirst also predicts that the easing cycle will start later and be less aggressive than expected, with a first rate cut in May and a terminal rate of 6 percent for the year [f223f50b].
In terms of exchange rates, iBanFirst forecasts that the EUR/RON cross will remain stable between 4.99 and 5.02 throughout the year. However, the USD/RON is expected to rise due to geopolitical factors and the resilience of the US economy. The US presidential election may introduce more volatility, but iBanFirst does not expect it to reverse the dollar gains. The current USD/RON rate is 4.60, with an expected price target of 4.80 [f223f50b].
Overall, iBanFirst remains optimistic about the Romanian economy, projecting an average GDP growth of 4 percent per year in the coming decade [f223f50b].