IMF thinks it is possible to relaunch Europe’s economy in 2010

The International Monetary Fund (IMF) informed on Tuesday that the severe recession of Europe’s economy might come to an end in the second half of 2010, followed by a gradual relaunch, but it conditions it by new actions, especially in the financial field, and by a political coordination at European level to ensure an efficient reply to the crisis, reads the spring report on Europe, „Regional Economic Outlook.”

For the advanced economies in Europe, the IMF predicts a 4 percent contraction in 2009, followed in 2010 too by a 0.4 percent negative economic growth. For the emerging Europe the IMF predicts a 4.9 percent economic decline in 2009 followed by a return to a 0.7 percent economic growth in 2010.

For Romania the IMF estimates that the real growth of the gross domestic product (GDP) will see a 4.1 percent contraction in 2009 after a 7.1 percent growth in 2008. In 2010 there will be a zero economic growth. The rate of inflation in Romania would slow down from 7.8 percent in 2008 to 5.9 percent in 2009 and 3.9 percent in 2010.

Romania’s current account deficit will also decrease from 12.6 percent of the GDP in 2008 to 7.5 percent of the GDP in 2009 and to 6.5 percent of the GDP in 2010. In its turn the governmental deficit will decrease from 4.9 percent of the GDP in 2008, down to 4.6 percent of the GDP in 2009 and to 3.6 percent of the GDP in 2010.

„The measures taken in order to counteract the serious recession in Europe turned out to be a good foundation for a gradual relaunch but new actions by the political decision makers are necessary, especially in the financial field, in order to reestablish the confidence of the markets and to speed up the relaunch,” said director of the IMF’s European Department Marek Belka.

Last week the IMF executive council approved the stand-by agreement with with Romania, for two years, worth 12.95 billion euros. The loan will be made in instalments till the end of 2010 and it will be paid back gradually, till 2015, the annual interest being about 3.5 percent.

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