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| IS ROMANIA IN RECESSION? 15/06/2009 |
| (2009-06-15) |
| Last updated: 2009-06-16 18:45 EET |
After a first quarter characterised by a negative growth rate and not very optimistic estimates for the second quarter of the year, the authorities in Romania have started speaking about recession. As early as last month, the National Statistics Institute in Bucharest announced that the country’s Gross Domestic Product, the GDP, dropped by 6.4% in the first 3 months of 2009 compared to the same period last year, while the Romanian economy shrank by 2.6% compared to the last quarter of 2008.
However, a well-timed statement by the National Bank Governor Mugur Isarescu, managed to allay fears at that moment. Having run the central bank for almost 20 years, the governor said he was hopeful the economy would see a positive trend by the end of the year. His opinion was not shared by anybody else. Analysts became instead more and more pessimistic, and their forecasts started predicting a 5 to 7% contraction of the economy as exports, imports, services, the retail trade and the industrial output dropped significantly. After he attended a government meeting at the week-end, president Traian Basescu said the optimism shown by the National Bank of Romania after April has not been confirmed by subsequent economic developments.
He added that the economy is expected to shrink in the second quarter, which, for all intents and purposes, means recession. The governor’s advisor, Adrian Vasilescu, says the president’s concerns about Romania going into recession are natural. He explained that the central bank’s optimism only covered Romania’s financing problems, which Bucharest has overcome in the meantime. Vasilescu admitted, however, that Romania is technically, on the verge of recession, because the second quarter of the year also seems to have registered a downward trend, but says the central bank hopes the economy would start recovering in second half of the year.
The newspaper Ziarul Financiar gives wide coverage to the statements made by president Basescu, which it sees as a powerful blow for Romanians, who are busy planning their holidays. “With the election campaign over, the president admits to fake optimism”, writes a headline in Ziarul Financiar. The paper also recalls an International Monetary Fund forecast which predicted a decline of Romanian economy in 2009 and the first part of 2010 and expected the GDP to register positive figures only in the second half of 2010.
The newspaper Romania Libera warns that the recession is likely to be joined by big trade union protests and quotes analysts as saying that the president’s Sunday visit to the government sends clear electoral messages given that the economy will be the most difficult theme of the presidential elections due in autumn.
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