Moody's Revises Dn Romania's '09 GDP Contraction Forecast To 5.7%

“The economy is now contracting sharply. Most export-oriented sectors have reduced production and the construction industry is faltering,” the report reads.

However, although the recession will be difficult, Moody's believes that "the economy will avoid a major Baltics-style collapse due to relatively low private sector debt and less reliance on foreign trade."

The rating agency also revised down its predictions on Romania’s budget to 6% of the GDP from 5.1% of the GDP as estimated previously.

For 2010, Moody’s sees a 0.2% GDP growth and a budget deficit of 4% of the GDP.

Moody's affirmed Romania's Baa3 rating with a stable outlook in March, considering the deteriorating macroeconomic picture against the financial support package from the EU and IMF, combined with additional measures to reform fiscal policy and the public sector.

"Romania's ratings are based on medium economic strength combined with medium institutional strength," the Credit Opinion report said.

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