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The adverse effects of the pandemic crisis on the labor market have been relatively limited so far, including in relation to expectations, given the resumption of activity in many sectors after the gradual relaxation of restrictions, but also as a result of the extension of government support measures aimed at maintaining labor relations, show the Minutes of the monetary policy meeting of the National Bank of Romania (BNR) Board of Directors, released on Tuesday.
According to the document, the number of employees in the economy practically stopped declining in June, and the BIM unemployment rate slowed its rise in May-July, and it even recorded slight downward corrections in August-September, reaching 5.2%.
The annual inflation rate is expected to decrease to 2.1% in December 2020 - from 2.7% in the previous projection - and to 2% at the end of the first quarter of next year, but then to rise and remain on the relevant horizon of the monetary policy in the vicinity of the central point of the target, similar to previous forecasts.
Council members pointed out that great uncertainties also characterize the future evolution of investments, whose growth is expected to slow in the fourth quarter of 2020, but to remain positive throughout the year - including with the support of government programs and measures - and to slightly speed up in 2021.
As regards the cyclical position of the economy, the members of the Council showed that, as anticipated, the economy contracted severely in the second quarter - to 10.3% in annual terms and 11.9% in quarterly terms - involving the sharp decline of the GDP gap in negative territory, from the substantially positive value in the first quarter. It was noted that, in an overwhelming proportion, the contraction is attributable to domestic demand, whose rebound was caused almost entirely by the population, mainly due to the acquisition of services - strongly affected by the social distancing measures instituted in the context of the state of emergency.
