Romanian Economy Likely To Recover As Of 4Q – Analysts

Analysts polled by Mediafax warned the economic recovery is tightly connected to the evolution in the euro zone, where the government measures implemented in the first part of the year are still to produce real effects in the private sectors.

“I expect the economy in the fourth quarter will stagnate or increase marginally compared with the previous quarter. However, this would be merely a sign. We don’t have to be too enthusiastic, as chances are we will see further declines,” said Laurian Lungu, director with Macroanalitica.

Industry is the first sector to rebound, analysts say, pointing to the seasonally-adjusted 4.5% increase in the second quarter compared with the first quarter of 2009.

“The industry is the first to come out of the crisis and it is strongly connected to the euro-zone. The 4.5% growth in the second quarter was very high. Therefore, we might see a positive rate in the fourth quarter, provided the eurozone remains on the current path,” said Lucian Anghel, chief economist with Banca Comerciala Romana.

The euro-zone and the European Union, in general, are the main commercial partners of Romania, with around 75% of both Romania’s exports and imports.

For the third quarter, Anghel sees an economic contraction similar to the one recorded in the second quarter.

Romania’s gross domestic product fell by 8.7% on the year in the second quarter and by 1.1% compared to the first quarter, on substantial declines in constructions, agriculture and retail.

ING Bank Romania senior economist Nicolae Chisdesiuc forecasts an economic contraction of 9% to 10% on the year for the third quarter of 2009. Compared to the second quarter, ING analyst expects the decline to slow down to 1% or even stop in the third quarter.

According to Ionut Dumitru, chief economist at Raiffeisen Bank Romania, the country’s economy is bound to touch its lowest peaks in the second and third quarters of the year, followed by a slight growth in the fourth quarter.

In 2008, Romanian economic growth was of 7.1%, the highest increase in the EU27 bloc. However, second quarter data placed the country among the members with the steepest declines in the bloc.

The International Monetary Fund expects Romanian economy to contract by 8%-8.5% in 2009, from an initial decline seen at 4.1%.