Romanian economy developing radically differently from officials’ expectations amid crisis

The economy has been developing radically differently in the first six months of this year than experts, governmental officials and business environment expected late last year, when the GDP scored a growth higher than 7 percent, the Ziarul financiar daily informs.

‘The economic growth over the first six months of the year was lower than expected late last year,’ the same daily writes quoting Macronanalitica expert Laurian Lungu as saying.

The economy contracted by 6.2 percent in the first quarter of 2009, and the prognoses for April-June point to a decline of around 10 percent.
‘Some macroeconomic indices went worse, while others improved, during this period financial analyst Dragos Cabat said.

‘The period was obviously a crisis one, and the economy and the budget deficit went worse than expected. Nevertheless, other indices such as the trade deficit scored positive developments against the background of the crisis,’ Cabat told the Ziarul financiar.

The positive development in the trade deficit occurs under the circumstances when the pace of the imports cuts was almost twice higher during the first 5 months of the year, compared to the decrease the exports were witnessing.

Romania’s exports dropped by one fifth, while the imports contracted by over 37 percent, during January-May, 2009.

The economic downturn triggered an accentuated slowdown in the consumption, which caused a much slower price rise, creating the prerequisites for Romania’s Central Bank (BNR) to attain its inflation target, for the first time, in the latest years.

On Thursday, BNR revised downwards, from 4.4 to 4.3 percent, the inflation prognosis for this year. Analysts expect inflation to go up by 5 percent in July, 2009 than in the same month 2008.

The main important element the analysts found in the first six months of the year was the stabilization of the exchange rate, after the Accord with the IMF was reached, the Ziarul financiar concluded.

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