EU Ups Romania 2008 Forecast To 6.2% From 5.9%

In its spring report, the commission said it now expects Romania’s economy to reach 6.2% of GDP in 2008, up 0.3% from a previous forecast of 5.9% it made last fall.

Romania is the only EU member for which the commission improved its economic growth estimations.   

However, the projections concerning Romania’s growth in 2009 are down to 5.1% of GDP from a previous forecast of 5.8%.

“In the second half of 2008, rising commodity prices and tighter credit conditions, including the cumulative impact of recent interest rate hikes by the central bank, are likely to start dampening consumption and investment growth. This effect is expected to persist well into 2009,” the commission said in its report.

Further decreasing of domestic demand will lead to fewer imports and eventually to a halt in external borrowing advance, according to commission analysts.  

In addition, the commission did not rule out the possibility of a more acute evolution of internal economic imbalances in Romania, due to higher than assumed wage increases and insufficiently adjusted fiscal policy.

Financial turmoil on the international markets might also have a negative impact on Romania’s economic growth, the commission mentioned.

Romania’s prognosis commission projected GDP growth at 6.5% in 2008 and at 6.1% in 2009.