EU: Romania GDP To Shrink 1.9% In 2010

Romania's economy will likely contract by 1.9% in 2010, hampered by weak domestic consumption and a bad agricultural year due to heavy flooding, a European Commission official said Wednesday.

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Speaking in a news conference in Bucharest, EU representative Laurent Moulin said the economy is bound to grow 1.5% or more in 2011, once consumption picks up.

Jeffrey Franks, head of the International Monetary Fund's mission to Romania, said in turn that the economy could grow up to 2% next year, followed by a more accelerated increase in 2012.

Romania and the IMF last year signed a EUR13 billion loan agreement, part of a larger EUR20 billion aid package that includes funds from the EU and other international lenders.

Joint teams from IMF and the EU arrived in Bucharest July 26 for the fifth review of Romania's agreement.

Following the mission, the IMF will decide whether to disburse another EUR900 million to Romania, whereas the EU is expected to release a third installment of EUR1.5 billion.

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