EC Revises Dn Romania’s GDP Growth Forecasts To -4% In '09, 0% In '10

"GDP growth is projected to turn negative in 2009 to around -4%. The slackening rate of household disposable income growth and tighter credit conditions will depress household consumption, while government spending is anticipated to contract following a significant fiscal adjustment. The anticipated strong contraction of gross fixed capital formation will be cushioned by an increase in public investment, as EU funded investment is safeguarded in the current budget,” the EC stated Monday’ in its economic spring forecast.

GDP growth is expected to remain around zero in 2010, according to EC estimates.

"This macroeconomic scenario constitutes the basis for the EU medium-term financial assistance programme to Romania,” according to the EC report.

The International Monetary Fund official forecasts on Romania also see the gross domestic product contracting by 4.1% in 2009, and a 0% GDP growth in 2010.

According to the National Prognosis Commission CNP spring estimations, Romanian gross domestic product is also seen contracting by 4% in 2009 and growing a slight 0.1% in 2010.

CNP has seen in its previous report the country’s gross domestic product growing by 2.5% in 2009 and by 4.5% in 2010.

Romania’s budget revision following the IMF and EU loan agreement is based on a 4% GDP contraction, a 5.8% inflation and a current account deficit of 7.5% of the GDP.

Romania’s GDP growth accelerated to 7.1% in 2008, from 6.2% in 2007, but its growth slowed down sharply in the last quarter of the year to 2.9%.
 

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