Romania’s Constitutional Court ruled on 25 June that some of the
austerity measures to be implemented by the government are
unconstitutional. To offset the ruling that pensions cannot be cut, the
government decided to increase VAT from 19% to 24%. These events
have prompted Bank Austria to re-think some of the trends envisaged for Romania.
The possible delay in a rebound of local demand – the VAT increase will
directly impact on household consumption - will be reflected in a further
drop in real GDP, by 2.5% yoy in 2010, a significant downward revision
from their previous forecast of -0.9% yoy.
Members can download Bank Austria´s revised forecast for Romania here.