Romania GDP Seen Growing 0.5% In Q4 Vs Q3 - Analysts

However, the growth is subject to timely reforms from the Romanian government, the analysts said, adding that failure to implement reforms could lead to economic contraction, either in the first or in the second quarter of 2010.

Romania's gross domestic product shrank by a seasonally adjusted 0.6% in the third quarter compared with the previous quarter. In unadjusted data, the GDP fell 7.1% on the year in the third quarter.

According to ING analysts, the high interests on the money market driven by central bank's policy to avoid the leu's depreciation could have a negative impact on the economy in the first half of 2010.

The Finance Ministry might not be able to lower the yields below 10% in January, even if the central bank would operate a new rate cut at its next monetary policy meeting January 5, ING said.

However, the yields should start dropping as of mid-February, provided Romania will receive the next tranches of a EUR13 billion loan from the International Monetary Fund.

Last week, Romanian President Traian Basescu said the IMF could release the two disbursements, which total EUR2.3 billion, on February 17, provided the authorities can adopt the 2010 budget by mid-January.

ING maintained unchanged its forecast regarding Romanian leu's evolution at 4.2 units per euro by end-2010 and at 3.8 units per euro in December 2011, on the backdrop of potential adjustments in the fiscal sector under the guidance of the IMF and of the European Commission.

If you liked this story, please follow MEDIAFAX.RO on FACEBOOK »

The content of mediafax.ro is for your information only. Republishing or using this content is forbidden without express consent of MEDIAFAX. For this consent, please ask for it by mail at vanzari@mediafax.ro.