IMF: Romanian Economy May Shrink In ‘09

“Exports began to tumble, credit availability tightened for firms and households, and domestic consumption and investment are poised to fall. Industrial output is dropping, and business and consumer confidence have deteriorated,” an IMF press release said.

An IMF mission held a regular staff visit in Romania between January 27 and February 4.

“Romania is now being increasingly affected by the global recession,” IMF said.

“Thus, economic activity will be weak, and GDP growth may well turn negative in 2009, with a moderate recovery only toward the end of the year or early-2010,” IMF also said.

The fund added that, while it is true that uncertainties surrounding the forecast are high, “the balance of risks is on the downside.”

The institution did not provide exact figures, but governmental sources told MEDIAFAX earlier Wednesday that the IMF predicts Romania’s economy will shrink by up to 1% in 2009.

IMF saw Romania’s economic growth above 1% when the mission started, the quoted sources said.

Following talks with large companies, banks, IMF experts concluded Romania’s GDP might shrink in 2009, they added.

Romanian authorities forecasted a GDP growth of 2.5% this year.