Romania’s Econ To Return To Positive Growth „Only” In 2H ’10 – IMF Official

“While some short-term economic indicators still indicate a deterioration of economic conditions, the rate of contraction seems to be moderating according to some indicators,” Lybek told MEDIAFAX.

IMF keeps its forecasts on Romania’s GDP growth at -4.1% in 2009 and zero in 2010. For 2011, the institution sees an ascending trend of Romania’s economy as the GDP growth is estimated at 5%.

Romania’s first quarter GDP shrank by a seasonally-adjusted 2.6% compared with the fourth quarter of 2008, and was down 6.4% against the first three months of 2008, in unadjusted data, the National Statistics Institute said last week.

In the last quarter of 2008, seasonally-adjusted GDP fell 3.4% compared with the July-September period, thus the economy is in recession after two consecutive quarters of economic contraction.

“The economic conditions in the first quarter of 2009 have also deteriorated in other countries. Hence, the decline in Romania must be seen in a broader context. Secondly, it is important to mention the fact that during previous deep economic recessions, it is not unlikely to observe a sharp drop at the beginning, instead of a gradual deterioration of economic conditions. Thus, the sharp drop in real activity was not fully unexpected,” Lybek said.

IMF will continue to monitor high-frequency indicators to evaluate if changes in the macro-framework underlying the program will be necessary. Any possible change will be discussed with the government during the upcoming mission in July or August, according to Lybek.

Romania agreed end-March with the IMF, the European Union and other international institutions a EUR19.95 billion financial package, supported by a EUR12.95 billion IMF loan under a two-year standby arrangement.

On May 4, IMF’s Executive Board approved the agreement with Romania.