The Governor of the National Bank of Romania: inflation in 2022 will be approximately 13.9%, and in 2023, 7.5%. Economic growth will be 2-3%

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By rbj
The National Bank of Romania (BNR) increased the inflation forecast for the end of this year to 13.9% and estimates inflation of 7.5% for the end of next year, according to the data presented on Tuesday by the governor of the BNR, Mugur Isărescu.
In May 2022, the BNR estimated inflation of 12.5% ​​for the end of this year and 6.7% for 2023.
According to the central bank, the annual rate of CPI inflation peaks during the third quarter, and from the fourth quarter it is on a downward trajectory, under the assumption of the gradual relaxation of the wholesale energy and food markets, as well as the gradual dissipation of syncopes in the global value added chains, but also as a result of some basic effects, after the strong upward corrections of the energy price from 2021, before the implementation of the support schemes for domestic consumers.
According to the presentation, the BNR expects a temporary interruption of the disinflationary trend in the second quarter of 2023, once the measures capping electricity and natural gas prices come into force.
At the forecast horizon, June 2024, the projected level is 2.3%, within the inflation target range, against the background of the manifestation of a substantial base effect.
At the same time, Mugur Isarescu specified that this year Romania could register an economic growth of 2-3%, possibly even higher.
“We don’t have a far from black outlook on the situation, but a slightly positive and realistic outlook. We are also trying, together with the Government, to bring inflation down without creating a recession. If the GDP in the second quarter is quasi-stagnant compared to the first quarter does not mean that the economy is stagnant. Just a little. In the first quarter, it grew by 5, almost 6%. If it is quasi-stagnant, the second quarter compared to the first means that compared to last year it is by 5% more. So our message was far from the stagnation of economic growth. We don’t forecast economic growth. … but in any case we don’t have, we’re not talking about the stagnation of growth this year. Probably somewhere 2- 3%, I say, who am more pessimistic, but it could be even more. If this trend in the third quarter will still be stagnant compared to the first quarter, which was 5.7% or 6%. So let’s try together with the Government to bring down inflation without creating recession and without affecting too much labor market. It is a difficult exercise. We have to be very careful how we navigate and how we calibrate the monetary policy”, said Mugur Isărescu.

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