Romanian Pres: Moody’s Evaluation Is Accurate

“I consider it the most accurate prediction of a rating agency, a warning that Romania risks entering into a recession,” Basescu said in a press conference.

He added that it is necessary to read "all that Moody’s said."

Romania’s president said that Moody’s "warned, but did not change Romania’s sovereign rating."

According to Basescu, a production cut and a slowdown in economic growth will certainly lead to lower budget cash-ins.

“I think we can build a budget in which to maintain Romania’s budget deficit below 3% of the GDP and in the same time respect our commitments,” Basescu said.

Moody’s rating agency predicts a moderate contraction of Romania’s economy in 2009.

"The economy would slow very dramatically beginning in the fourth quarter. All of the pieces are starting to line up against the Romanian economy, (…) the economy will need to undergo a difficult adjustment that could last 1-2 years. Export growth will decline because of the slowdown in the rest of the EU, and the global liquidity crisis will restrict capital inflows into Romania, hurting domestic consumption and investment," Moody’s analyst Kenneth Orchard told MEDIAFAX last week.

A poll made by Mediafax among 11 Romanian and foreign analysts showed that the economy will grow by 8.2% on average in 2008 and will fall to 3.4% in 2009. In the last quarter of 2008, the gross domestic product will grow by 6%, according to analysts.

Moody’s analyst Kenneth Orchard was the only analyst who predicted a recession in Romania.

The Romanian National Prognosis Commission forecasts a gross domestic product growth of 9.1% for this year and 6% for 2009. The central bank sees GDP up 8-9% in 2008 and 4-5% in 2009.

In the first six months of the year, the economy grew by 8.8% in real terms, boosted by a 9.3% growth in the second quarter of the year.