EBRD: Greece’s Troubles Unlikely To Send Romania Back Into Recession

Greece’s seemingly turn for the worse is unlikely to push Romanian economy into recession, said Peter Sanfey, lead economist at the European Bank for Reconstruction and Development.

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"We see a return to negative growth in Romania as unlikely, regardless of how things turn out in Greece. Of course there are downside risks, but the recent indicators point to a bottoming out of the economy and support our view that some slight recovery is under way, Sanfey told MEDIAFAX in an email.

He said Romania is poised to see a modest economic growth in 2011, followed by a more accelerated expansion in the next years.

Although a possible worsening of Greece's situation would affect all European countries, Romania shouldn't take a direct hit, Sanfey added.

"The Romanian economy is well diversified, both in its overall structure and in its trade relations. Thus, although there is some direct exposure to Greece, any adverse effects would come indirectly through the impact on the larger European economies," he said.

Sanfey declined to comment on a possible default of the Hellenic state, adding that the Greek banks are unlikely to interrupt financial support for their subsidiaries in Romania and surrounding states.

Moody's Investors Service Thursday downgraded its sovereign rating on Greece once again, warning about a possible default due to the country's suffocating debt.

The ratings agency cut Greece to "Caa1", its third-lowest rating, with negative outlook, and said further downgrades may be on the way.

Additionally, the International Monetary Fund warned that it could halt a EUR12 billion loan tranche to Greece from a larger EUR110 billion multilateral bailout unless the European Union can guarantee adequate funding for the troubled economy over the coming years.

EU officials are seeking unison over new aid for Greece to prevent debt restructuring, a move seen as a default by analysts and investors alike.

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