Acasă » General Interest » Economics&Markets » UniCredit: Consumption will increase by 8.6%, inflationary pressures if oil jumps over 65 USD

UniCredit: Consumption will increase by 8.6%, inflationary pressures if oil jumps over 65 USD

5 October 2016
Economics&Markets
Bogdan Tudorache

The annual inflation could rise from almost zero at the end of 2016, to more than 1% in the first quarter (Q1) of 2017, reaching 2% in Q2 2017, UniCredit analysts say. Inflation will grow due to increased consumption of the population which will climb 8.6% this year and 5.4% in 2017, according to UniCredit forecasts.

“We do not expect inflation to exceed the target of 2.5%, even if the oil price would increase to USD 65 / barrel by the end of next year. The main reasons for this dynamic are: low prices for food, cheap imports from the euro area and a small contribution to inflation of state managed prices,” analysts say.

According to UniCredit economists, the gross domestic product (GDP) growth this year could reach the highest level after the financial crisis, of 4.4%. However, excluding agriculture, the growth peaked last year (4.2% in 2015 from 4.1% in 2016). The strong growth in private consumption could lead to more imports than in all other countries of Central Europe (CE), given that local producers are unable to capitalize on accelerating retail sales.

“We anticipate a deceleration of growth to 3.4% next year, and the first signs of a slowdown could be visible starting this year. First, agriculture’s contribution to GDP would be lower (or will lack) in 2017 after the 2016 very good harvest.”

Analysts say that real wage advance may slow next year amid lower revenue growth and higher inflation.

“Under these circumstances, fears of an economic overheating induced by credit expansion are exaggerated.”

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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