The nine-month average inflation will be twice as high as the year before, reveal forecasts based on the trend surveys conducted by the National Forecast Commission (CNP) on a sample of representative companies from all counties and industrial branches.
"The doubling of the figure is the effect of what happened in spring, over March – April, because of the price hike, and especially for foodstuff. What really counts is if in 2009 we will succeed in reverting to 4%," CNP president Ion Ghizdeanu told Ziarul Financiar. The average inflation is the indicator based on which Romania's request for the initiation of the euro adoption process scheduled for 2014 will be analyzed.
Thus, inflation is required not to exceed by more than 1.5% the median of the best performing three EU members. The median has meanwhile doubled to 3%, Ghizdeanu said.
"We expect both inflation and the trade deficit to decrease in the last part of the year," added the head of the Forecast Commission. Since the beginning of the year, the average inflation has followed an upward trend, taking in consideration the bulk of administered prices as well as international influencing factors such as the rise in foodstuff and oil prices.
The average inflation was 4.84% in 2007 and the year-end inflation was 6.57% higher than the upper limit of the 3 – 5% interval approved by the National Bank of Romania (BNR).
As far as this year's evolution is concerned, the International Monetary Fund, the European Commission and CNP all agreed on the inflationist slippage. Brussels sees the average annual inflation at 7.6% this year, by 2% above the previous forecast; CNP corrected the average annual rate from 7% to 7.5%, respectively from 5.4% to 5.8% for the variant December-on-December, with the possibility to revise the figures in fall. The IMF said inflation will be 6.5% in December and the average rate will be 7%. The central bank's inflation forecast for 2008 is 6.6%, whereas its targeted consumer price index was 3.8% plus minus 1%. The annual rate of inflation peaked in July at 9.04%, placing Romania fifth in the EU by the annual growth in consumer prices.
Managers estimate that in September, consumer prices will be 4.7% as to December 2007.
Consumer prices, that were analyzed in relation with the evolution of industrial production prices for the domestic market, will rise by a monthly average of some 0.36% in Q3, less than in the period July – September 2007 (0.74%), and also below the value registered in Q2 2008 (0.43%).
As for the trade deficit, which weighs heaviest on the current account deficit, the managers forecast that in nine months it will reach 16.47 bln euro, compared to 15 bln euro for the same interval of 2007.
Exports are expected to hit 25.83 bln euro over the interval January – September, up by some 20%; imports are expected to climb 15.7% to 42.3 bln euro. Total commodity imports will mainly rely on investment imports (21.7%) and less on consumption imports (some 9%), compared to the same period of 2007. The nine-month growth in industrial production will be 6.1%, a steeper advance than the 5.8% registered over January – September 2007. The advance in industrial production accompanied by a decrease in the number of employees in the sector will push labor productivity by 9.6% higher over January – September and by 9.8% in Q3 compared to the similar period of 2007.