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| PREDICTION TIMES 25/11/2008 |
| (2008-11-25) |
| Last updated: 2008-11-26 14:32 EET |
Moody’s rating agency’s assessment that Romania might enter recession in 2009, after quite a few years of reported economic growth, has been perceived differently in Bucharest, both by pundits and the authorities. Romanian president Traian Basescu has described Moody’s warning as being accurate:
“Moody’s is warning us: be very careful when you manage your budget; if you keep your expenses at the same level, you are likely to have a very big deficit and to enter recession, at that. We’re not going to lower your country rating, as we hope that when you discuss the budget, you will take into account the fact that your public spending can no longer be the same as last year.”
Moody’s experts said Romania’s GDP growth would go down by 0.3% below 0, yet Romania’s rating prospects will not suffer because of that. Exports growth will slow down because of the downturn EU member states have been going through. Also, the global liquidity crisis will restrict capital flows towards Romania, thus affecting consumption and domestic investments.
Prime Minister Calin Popescu Tariceanu admitted that the aftermath of the world economic crisis would also take hold of Romania; however, Tariceanu said, Moody’s might have a problem, as they might lack complete awareness of Romanian economic realities. The Romanian Prime Minister mentioned the European Commission’s assessment on a 4.9% growth of the GDP for Romania in 2009.” No doubt Romania cannot escape the aftermath of the crisis as we ARE part of a global economy. We’re no longer going to have the same growth rate, yet I believe the Romania’s economic growth rate will be far higher than that in West European countries, or in other developed countries around the world, Calin Popescu Tariceanu also said. Divergences aside, opinions converge over the fact that we’re in for a difficult year. Adrian Vasilescu, advisor with the National Bank of Romania has more:
“I don’t know what Moody’s is doing, but when it is trying to lower down Romania’s GDP from 9% in 2008 to below zero in 2009, I can’t make any head or tail of that. Otherwise, I agree with the president that Moody’s warnings must be heeded. If we put figures aside and pay heed to warnings, they are perfectly correct, and we have to realize that in the coming year we need to complete the puzzle so that several policies should go hand in hand: the monetary policy, the budgetary-fiscal policy, as well as the policy of incomes and economic policy. If in 2009 we are unable to correlate those policies, we will have to go back to what Moody’s said and see how we manage to solve the problems.”
Razvan Voican, an analyst with the Romanian daily paper Financiarul referred to another major component of the economic crisis:
“A decrease in investments is possible, but it also true that a series of wide-scale projects that have been launched in Romania in recent years are based on long-term plans; and those companies that have come up with such plans won’t give them up just because a rating agency placed Romania on a lower position in terms of country risk, all the more so as Romania’s EU membership is a strong argument in this respect. It is also true that in times of crisis, a tremendous costs-generated pressure may crop up. Information has already emerged on displacing a series of production units from Romania to neighboring countries, where costs are lower, yet that is not a main trend for the entire economy.”
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