A Weak Leu Helps Mend The Romanian Curr Acc Deficit - Erste

Since summer 2007, Romania is facing periods of strong capital withdrawals, triggered by concerns regarding the vulnerability of Romanian economy nd the impact of the weaker currency on the economy, especially in finances, the report states.

"We feel that the weak national currency supports Romanian economy and the adjustment of the strong current account deficit. Since the beginning of the year, we have noticed great deceleration in the deterioration of the current account,which suggests that the current account deficit in ratio with the GDP might enter a phase of stagnation this year (as opposed to the general consensus on the market that forecasts a minor increase)," said Erste analysts.

According to Erste , the current account deficit will be partially financed through inflows of foreign direct investments, estimated at 6% of the GDP, and the continuous growth of foreign loans, mainly in the private sector.

According to data from the Romanian central bank, the increase in the current account deficit continues to be significantly lower than in the previous year, the advance in the first four months of the year being 7.5%, thus the value of the deficit reached EUR4.84 billion.

In the first four months of 2007, the trade deficit grew by 115%, from EUR2.06 billion to EUR4.44 billion.

The Erste report analyses the economies and banking sector in central and eastern European (ECE) states.

Romania's GDP grew in the first three months by 8.2%, the greatest growth registered in a first quarter after 1990.