Credit rating agencies do not know Romania and they draw up office reports

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Prime Minister Calin Popescu Tariceanu is arguing that the credit rating agencies currently predicting a hard landing for the Romanian economy do not know the realities in the country and are drawing up their reports from office instead of from fact-finding visits.
 
"There are rating agencies giving Romania a perfunctory look. I see many such reports that do no know the economic results of the country. Romania is not a country facing smaller risks than any other European Union countries," Tariceanu said in an interview published on Sept. 1.
The press reports that Moody’s, Fitch and Standard & Poor’s have estimated a slowdown in Romania’s economic growth. A Standard & Poor’s team was expected to visit Bucharest on Sept. 1.
 
"Romania will probably record a slight economic downturn in the next years. But if we look at the economic growth of other European Union countries – of 1-2% – we cannot but notice that what is now happening in Romania is a much more solid economic growth. Those who talk of a forced landing of the Romanian economy prove that they do not know Romania. Just take a look at figures: the trade deficit is narrowing, albeit slightly, but it is still narrowing," says Tariceanu.
 
Tariceanu tries to contradict the general opinion of the analysts of the most important credit rating agencies who argue it would be highly unusual for Romania not to be affecte by the decline in the economies of the Eurozone, which is the main foreign trade partner of Romania and which is likely to record a fall in demand for imports.
 
The most recent assessments can be seen as pessimistic because they do not take into account the wealthy farm yields of this year, which will bring a significant contribution to boosting Romania’s Gross Domestic Product (GDP), which development does not necessarily depend on the Eurozone economies, as Romania is recording supply deficits for many food products and the demand worldwide is very high, says Tariceanu.
 
The Romanian Government is expecting an 8.6-percent H1 2008 economic growth, but local analysts say the rate should be below 8% for the entire year, as they are anticipating a visible slowdown in exports in the last part of 2008 that should continue into 2009 determined by the developments in Western economies.
 
Tariceanu argues that the Romanian economy will benefit from investments of some 100 billion euros in the next four years, which comprise both foreign and government investments. One of the supporting examples to the point, says Tariceanu, is the decision of Austrian Voestalpine company to build a 5-billion-euro iron and steel plant near the Black Sea town of Agigea.
 
The prime minister says that the latest inflation data will be available in some days. This June, inflation is said to have been zero, but for the developments in the administered prices for electricity and gas. "The report on inflation over the past 12 months will indicate that the inflation is falling," says Tariceanu.
Tariceanu believes the world economic crisis will affect Romania to smaller extents. "As long as Romania is a country with an emerging economy, it will continue to grow," he says.
 
He also does not show worries over the decline in the local real estate market, which used to contribute a lot to economic growth. "This is about a correction. The real estate market truly has an influence on the construction sector, but the real estate market is only 10% of the construction sector. In my opinion what we are witnessing now in the real estate sector is a price settling. The storm on the real estate market is handier for the skeptics because it is more visible.
 
But in the construction sector, the real estate aside, the 90% of it is going on smoothly."
Asked by the paper to say how justified the latest measures taken by the National Bank of Romania (BNR) to toughen loan requirements in an attempt to dampen rises in consumer loans, Tariceanu said BNR could have not taken them, but since it did take them their results remain to be seen.
In relation to criticism that wage rises outdo productivity gains, the Romanian head of state says the country can no longer afford to be attractive for law wage costs only.
 
As regards the stock exchange, Tariceanu believes the current decline there is because of the international context and it expects it to bounce back because good economic performance will make investments there attractive.
On the other hand, Tariceanu says the integrated energy corporation approved to be established in Romania is an important national project and the project will be carried out despite criticism, coming also from the European Commission, which Tariceanu argues is not entirely justified. He insists that this integrated energy corporation will be a drive that will help Romania become an important regional energy player.
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