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FORECASTS FOR THE ROMANIAN ECONOMY IN 2009
(2009-01-28)
Last updated: 2009-01-29 15:25 EET Print
For the second time in the last two months, the European Bank for Reconstruction and Development has revised its estimate regarding Romania’s economic growth down from 3 to 1%. Earlier, the European Commission reduced significantly Romania’s economic growth forecast for this year from 4.7% to 1.75% as a result of the difficulties on the credit market, the deterioration of confidence ratings and the worsening situation on the labour market. The Standard and Poor’s analyst Marko Mrsnik also believes the Romanian economy will see a strong economic slowdown this year. While this may not necessarily lead to recession, the drop will nevertheless be felt like recession. In Mrsnik’s opinion, the sector likely to feel the strongest impact of the crisis are exports as a result of a drop in foreign demand. Also, the areas that have accumulated debts in their times of economic growth will also suffer from a lack of liquidity. With regard to the budget deficit, the Standard and Poor’s expert says a 5% level would be more realistic than the 2.5% put forward by the government. Romanian experts believe Romania needs substantial foreign financing of at least 10 billion euros in order to cover its huge budget deficit. The authorities have invited an IMF mission to Bucharest these days to evaluate the country’s economic situation and discuss governmental policies. Official sources say the Fund’s representatives were interested in the way in which the 2009 budget was structured and the resources found by the cabinet to cover the deficit. The first signal came from president Traian Basescu who said he wasn’t a big supporter of Romania loaning money from the IMF, but from the European Union. He said he briefed the European Commission on Romania’s intention to make a 6 to 7 billion euro loan under the supervision of the Fund. President Basescu identified two factors he views as crucial for Romania: “The first thing is the immediate payment of state debts to economic operators. We have agreed in my discussions with the government that paying back this money is the number one priority so as to allow the economy to start moving again and unblock companies. The second priority is to create jobs. Creating jobs means starting infrastructure works funded by the state until we can bring in money from the European Union.”

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