Romanian Economy Seen Growing 1.6% In 2010 – ING Bank

However, the bank revised downward its forecast on the economic growth in 2011, to 0.9% from 2.6% previously seen, due to a slow fiscal adjustment.

"The economic growth will be very slow, mainly because we expect fiscal adjustment to be slow," said Nicolaie Chidesciuc, senior economist at ING Bank Romania.

Romania's economic forecast remains weak and the slight increase estimated for next year might fade away in front of harsher measures the government might take to fix structural difficulties, the lender said in a report.

A bad agricultural year could also lead to an economic contraction in 2010, the report noted.

ING estimated Romania's economy will contract by 7.5% in 2009, following quarterly declines seen at 9.2% in the third quarter and at 5.9% in the fourth.

ING is slightly more optimistic than the International Monetary Fund, which predicted an economic contraction of 8%-8.5% this year and a slight growth of up to 1% in 2010.

The lender estimated Romania's budget deficit will reach 7.7% of the gross domestic product this year, from 4.9% of the GDP in 2008. The deficit gap is expected to narrow to 5.9% in 2010 and to 4.2% in 2011.

A possible global economic revival will provide scarce support for the Romanian economy, mainly because the country's relaxed fiscal policies, ING said.

It estimated Romania's jobless rate will increase to 8.4% and 10.5% in 2009 and 2010, respectively, after which it should drop to 8.5% in 2011.

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