| NEGATIVE FORECASTS FROM THE WORLD BANK 11/10/2010 |
| (2010-06-11) |
| Last updated: 2010-06-14 13:20 EET |
The report estimates that at the end of 2010 Romania will have registered a 0.5% drop in the GDP, as compared to a 7.1% contraction in 2009. Besides domestic reasons, another potential explanation for Romania’s slow economic recovery could be the effect of the situation in Greece. The World Bank report shows that the countries whose financial sectors are burdened with huge debts are at risk. And Romania, alongside Albania, Bulgaria and Serbia, previously received large inflows of capital from Greek financial institutions. The World Bank draws attention to the fact that the Greek banks, interested in rebuilding their asset portfolios, could decide not to reschedule loan payments, which would seriously affect both investments and economic activities in these countries.
According to the 6 month report on global economic prospects, drawn up by the World Bank, Europe started recovering in the second half of 2009, supported by an anti-cyclical monetary policy. However, the financial institution also warns that some European countries might continue to see a fall in GDP, unless the region manages to solve its debt crisis, which threatens a whole list of countries, from Central Asia to Latin America. World Bank Director Andrew Burns anticipates that in the second half of 2010, economic growth will stay below initial estimates, and it is very likely that some countries will face economic contraction, and others a W shaped recession.
Still, at regional level, in Europe and Central Asia, the Bank foresees a recovery of real GDP by 4.1% this year, after a contraction of 5.3% in 2009. The recovery reflects a growth of the regions’ largest economies, those of Russia and Turkey, which generate 62% of regional GDP. Growth rates of 4.5% and 6.3% respectively are estimated for these countries. Regional growth could have been stronger, but was held back by local adjustments in some countries, due to their dependence on credit inflows and the large current account deficits they had when the crisis started. There is, however, some good news for developing countries. World Bank experts say that they will be at the forefront of global recovery, with economic growth rates standing at double those seen in developed countries.
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2025-04-03
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