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NBR: Economic growth of 6% in Q2, decerasing deflation

7 November 2016
Economics&Markets
Bogdan Tudorache

Consumption raises the economy by 6 percent in the second quarter and the inflation rate starts to grow, reveals a release of the National Bank of Romania.

The annual inflation rate declined in September 2016 to -0.6 percent, slightly below the forecasted level, after having reached -0.2 percent in August.

”Excluding the transitory effects of the standard VAT rate cut, the annual inflation rate would have stood at 0.8 percent in September 2016. The average inflation rate advanced to -1.7 percent in September 2016 (from -2.0 percent in June 2016) and that based on the Harmonised Index of Consumer Prices rose to -1.3 percent (from -1.7 percent in June 2016).

”Economic growth gained momentum in 2016 Q2 to 6 percent, prompted by household final consumption, to which added gross fixed capital formation. However, net exports increased their negative contribution to annual GDP growth. The latest statistical data point to the deceleration in retail trade dynamics in the first months of Q3, as well as to a step-up in the growth rate of industrial output, mainly ascribable to the manufacturing sector. At the same time, the current account deficit widened more slowly as a result of larger EU fund inflows”, say the NBR officials.

”The risks and uncertainties associated with the inflation outlook stem from both domestic and external sources. On the domestic front, risks relate primarily to the configuration of the 2017 budget. Risks from the external environment are mainly generated by the lingering uncertainties about global economic growth and euro area economic recovery, given the slow-in-coming rebound of major emerging economies, the challenges facing the European banking system, and the outcome of the UK referendum.”

At the same time, NBR decided to keep unchanged the monetary policy rate at 1.75 percent per annum.

Autor: Bogdan Tudorache

Active in the economic and business press for the past 26 years, Bogdan graduated Law and then attended intensive courses in Economics and Business English. He went up to the position of editor-in-chief since 2006 and has provided management and editorial policy for numerous economic publications dedicated especially to the community of foreign investors in Romania. From 2003 to 2013 he was active mainly in the financial-banking sector. He started freelancing for Energynomics in 2013, notable for his advanced knowledge of markets, business communities and a mature editorial style, both in Romanian and English.

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