European Commission improves Romanias 2008 GDP estimates

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Romania is the only member state of the European Union to have had its economic estimates in the spring economic forecasts 2008-2009 of the European Commission improved from the autumn 2007 estimates, with its economic growth estimates increasing by 0.3 percent, from 5.9 percent to 6.2 percent. With the exception of Denmark and Slovenia, for which the European Commission has asserted its economic growth estimates, the other EU member states had their economic estimates downgraded.
 
Nevertheless, the European Commission is predicting a downfall in the advancement of the Gross Domestic Product (GDP) of Romania from 5.8 percent in 2007 to 5.1 percent in 2009.
 
At the same time, the Commission is predicting Romania’s Government deficit to broaden from 2.7 percent of the GDP in 2007 to 2.9 percent in 2008 and 3.7 percent in 2009.
 
The local currency, the leu (RON), should continue to depreciate against the single European currency, with one euro expected to be worth RON 3.71.
 
In spite of the contraction of several labour-intensive industries (especially textiles and clothing), overall employment grew by 1.3% in 2007 and is projected to still expand by almost 1% in 2008 and ¾% in 2009. The job creation process in the formal private sector will be sustained by foreign investment and goes hand in hand with a further reduction of the informal economy.
 
Unemployment is projected to decline slightly over the forecast period to just above 6%.
 
However, increasing skill shortages are driving up unit labour cost, affecting Romania’s international competitiveness, the European Commission warns.
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