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IMF Revises Dn Romanian ’10 External Gap Forecast To 5.6% Of GDP

The International Monetary Fund revised its 2010 forecast on Romania’s current account deficit to 5.6% of the gross domestic product from 6.5% of the GDP previously estimated, according to the fund’s latest World Economic Outlook released Thursday.
IMF Revises Dn Romanian ’10 External Gap Forecast To 5.6% Of GDP
01 oct. 2009, 11:21, English

The IMF confirmed its previous prediction of an external gap of 5.5% of the GDP in 2009.

Romania’s average annual inflation is now envisaged at 5.5% in 2009, against a prediction of 5.9% made in spring. For 2010, the inflation is seen narrowing to 3.6%, from 3.9% previously estimated.

The Fund kept unchanged its forecast on the country’s GDP, which is seen contracting by 8.5% in 2009, followed by a slight growth of 0.5% in 2010.

Romania’s central bank set a 3.5% inflation target for this year, with one percentage point variation band. In August, the bank estimated the annual inflation will be at 4.3% in December and at 2.6% by end 2010. The IMF sees end-2009 inflation also at 4.3%, and expects the rate to be at 3% in December 2010.

An IMF mission came to Romania early August to assess the country’s progress, following the EUR12.95 billion two-year stand-by loan agred in spring.

The IMF loan is part of a larger EUR19.95 billion aid that also includes funds from the European Commission, the World Bank and the European Bank for Reconstruction and Development.

Back in the spring, the IMF predicted a 4.1% economic contraction for Romania in 2009, but has since revised its forecast to between 8% and 8.5%.

In August, the IMF agreed to allow Romania run a budget deficit of 7.3% of the GDP this year, nearly double from the 4.6% cap negotiated in the spring. For 2010, Romania pledged to lower its budget deficit below 6% of the GDP.