Romania GDP Unlikely To Match 2008 Levels Until 2013 - Coface

Romanian gross domestic product per capita is bound to remain below the 2008 level until 2013 or 2014, according to estimates of Coface ratings agency.

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Imaginea articolului Romania GDP Unlikely To Match 2008 Levels Until 2013 - Coface

Romania GDP Unlikely To Match 2008 Levels Until 2013 - Coface

Coface has left its sovereign rating on Romania unchanged at "B" in January and estimated the economy would grow by 1.5% in 2011, after a decline predicted at 1.9% for a year earlier.

Romania has been under a 'B' rating since June 2009.

Exports and industrial output will remain key factors for the economic growth in 2011, Coface said.

It said household consumption is likely to remain weak throughout the year, largely due to low consumer confidence.

Coface analysts estimated Romanian budget deficit is likely to reach 4.9% of GDP in 2011, above official forecasts of 4.4% of GDP.

"Budget revenues are likely to increase slightly, but we don't think the necessary spending adjustments will be made correctly and in due time," said Cristian Ionescu, Coface country cluster manager for Romania, Bulgaria and Slovakia.

Ionescu said the high level of government general arrears is likely to hinder the authorities' plan to narrow the budget deficit.

The ratings agency estimated an annual inflation of 5.2% for the year-end, again above the official forecast of 3.4%. The higher inflation will be driven by increased prices of raw materials on international markets.

"We can see that the prices of sugar and rice have increased to record levels, while oil prices have also gone up and chances are they will continue to grow. If you add the domestic factors that contribute to inflation, you will see an annual rate of 5.2% in 2011," Ionescu said.

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