EC: Romania’s GDP Growth Seen Slowing To 4.7% In ’09 From 8.5% In ’08

“Romania’s economy is overheating, but growth is set to slow down. Nevertheless, the current account deficit will remain at worrying and only slightly falling levels. This, together with a worsening fiscal outlook, protracts the vulnerability to external shocks, particularly in the current period of global financial stress,” the EC said in the report.

Romania’s National Prognosis Commission expects a gross domestic product of 9.1% at the end of 2008 and 6% in 2009.

“After reaching 6.0% in 2007, real GDP growth accelerated to 8.8% in the first half of 2008. This performance significantly exceeded expectations and has mainly been driven by a record surge in private consumption and gross fixed capital formation, following high real wage growth, a boom in domestic credit and sustained FDI inflows,” the EC said.

The European Commission said that the GDP’s performance in the first half of 2008 was driven by a record surge in private consumption and gross fixed capital formation, following high real wage growths. For the second half of 2008, the EC expects a slowdown of the GDP.

“Domestic demand is expected to slow down due to tighter credit conditions induced by monetary policy and the gene al global financial situation. In addition, it is likely to be affected by a decrease in consumer and investor confidence,” the EC said.