Romania’s Econ Shows Signs Of Overheating – EU Council

Romania’s rapidly expanding economy is showing clear signs of overheating with a ballooning current account deficit, growing labor shortages and private lending, the Council of the European Union said after examining Romania’s updated euro adoption timetable for 2007-2010.

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The Romanian economic growth has been robust in recent years, expanding by an average 6.5% per year between 2003 and 2006, when it reached a peak of 7.7%.

“The macroeconomic scenario underlying the programme envisages real GDP growth to accelerate from 6.1 % in 2007 to 6.5 % in 2008 and to ease towards 5.8 % in 2010,” the Council said. “Assessed against currently available information, projected growth in 2008 and 2009 is on the high side.”

The Council warned against the fast deterioration of the external imbalances, which raises concerns, as shown by the depreciation trend of the Leu since mid-2007, against the background of a general risk-repricing in international financial markets.

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