Romania’s Return To Growth Depends On Fiscal Policy, Euro-Zone Recovery - Analysts

Economic analysts polled by MEDIAFAX see a minor economic growth next year, with estimations varying between 0% and 1.7%, and the median forecast at around 0.7%.

In previous years, analysts have also predicted an economic growth for the following year, but forecasts were repeatedly revised due to uncertainties regarding both the local and the external macroeconomic frameworks.

Thus, in December 2009, forecasts for 2010 were between +0.6% and +2%, but they were revised after the government was forced to adopt several austerity measures to contain the budget deficit in the limits agreed with the International Monetary Fund and the European Commission.

In July, Romania's government cut the public salaries by 25% and raised the sales tax by 5 percentage points to 24%, decisions that had a great impact on domestic consumption.

For 2011, ING Bank Romania chief economist Nicolaie Chidesciuc forecasts a 0.2% GDP growth, as an economic recovery is expected only in the second half.

He said the economy may remain mired in recession if the political instability grows further, state arrears increase and the problems in the euro-zone periphery will continue to impact the financial markets.

RBS Bank Romania economist Florentina Cozmanca sees the GDP growth between -1% and +1% in 2011, adding the return to growth might be influenced by new austerity measures, the foreign banks' exposures on the local market and the external demand.

Also, Piraeus Bank Romania analysts forecasts a 0.6% economic growth next year, adding a new wave of austerity measures might stop the recovery, as it happened in the second half of 2010.

BCR and Unicredit Tiriac Bank representatives are the most optimistic, predicting a GDP growth of 1.2% and 1.7% respectively for 2011.

For 2012, economic analysts forecast a consolidation of the economic growth at 2% to 3.4%.

Romania is the only European Union economy that is to contract for the second year in a row in 2010, after a 7.1% GDP fall in the previous year.

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