Oxford Economics: Romania To Remain In Recession Until 2012

"Uncertainties continue to surround economic prospects, with the latest indicators confirming that the contraction in activity has resumed in the second half of this year. The gross domestic product is not expected to start growing again until the second quarter of 2011", Oxford Economics said in a report.

For 2010, the institution estimates an economic contraction of 2.7%, slightly down from minus 2.6% previously predicted.

Oxford Economics said consumer spending, which rose 0.8% on the quarter in the second quarter, is now weakening markedly and for 2010 is likely to shrink by nearly 4% as a whole before a further 2.4% drop in 2011.

Consumer confidence, already weak, plummeted as the government announced harsh austerity measures in the summer, including wage cuts and layoffs, and despite another rise in September was still significantly lower than a year earlier, the report noted.

"The only bright spot is the continued growth in exports of goods and services, up 2% in the second quarter to stand 19.6% above their year-earlier level," Oxford Economics said.

However, import growth is catching up with exports, while the improvement in the current account deficit is also being reversed by sharply lower remittance inflows, it noted.

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