Erste: Romanian Disposable Income To Fall 10% In 2010

Disposable income of households rose by approximately 15% in Romania last year, after a 20% increase in 2008, Erste said in its „Resuscitation of consumption in CEE” report.

In central and eastern Europe, disposable income is estimated to increase by about 1%-2.5% in 2011.

„In Romania, where the government approved ambitious austerity measures (including a five percentage point hike of the value added tax level), the growth of disposable income in real terms will remain in red figures next year, due to increased inflation,” Erste said.

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It said household consumption in Romania is likely to grow by 1% in 2011, boosted by new consumer loans.

„A continuation of the monetary policy easing cycle through cuts in minimum reserve requirements and an increase in the volume of financial resources available for the private sector (due to the ambitious fiscal consolidation process followed by the government) are supportive for this scenario,” the report noted.

In addition, Romanian nominal wages are expected to rejoin an upward trend in 2011, it said.