Romanian GDP Seen Up On Higher Exports In 2010 - Analysts

On the other hand, analysts estimate that certain risks for next year's economc growth might occur due to the fiscal policy and a potential overestimation of the world economy recovery.

Analysts estimations put Romania's economic growth between 0.6% and 2% in 2010, after a 7% fall in 2009.

The economy will stagnate in the first half of 2010, but the full-year growth is estimated at 1%, according to Ionut Dumitru, Raiffeisen Bank Romania chief economist.

"The recession will most likely be overcome through the exports channel, given that the local demand (consumption and investments) would most likely continue to be impacted by the poor perspective of people's income, the modest evolution of lending and the highly difficult situation of the public budget," Dumitru told MEDIAFAX.

He said the highest risk for the economic growth in 2010 and even in the following years would be the government's ability to adjust the budget deficit by cutting spending and changing its structure.

Nicolaie Chidesciuc, ING Bank Romania senior economist, and Catalina Molnar, RBS Bank Romania economist, also deem the economy revival in 2010 would be supported by the industrial sector, adding that the main risks for the GDP growth would come from the fiscal policy and the global economy, and that the constructions sectors would be most likely the most impacted.

"We estimate a 1.6% economic growth next year, after a 6.5% contraction in 2009. In an optimistic scenario, the economic growth might exceed 2%-3% in 2010, while in a pessimistic scenario, it might register a fall," Chidesciuc said.

According to Molnar, the economy will grow by 0.7% in 2010, after a 7% fall this year.

"The risks are related to the potential increase of taxation levels to adjust the budget deficit if the political will to drastically cut current expenses is not very strong. Moreover, the world economy recovery might also be overestimated, thus, the foreign demand for Romanian products might be overestimated as well," Molnar said.

Banca Comerciala Romana chief economist Lucian Anghel estimates an economic growth of 0.6-1% next year, after a 7% GDP contraction in 2009.

"Next year, the economy might vary between stagnation and, under an optimistic scenario, a 3% growth. Still, the optimistic scenario depends on agriculture and takes into account exceptional weather conditions," Anghel said.

The country's gross domestic product fell 7.4% on the year in the first nine months.

The International Monetary Funs estimates a 7% economic contractiion in 2009 and a 1.3% GDP growth in 2010.

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