AOAR: Romania’s GDP to advance 0.5-1pc in 2010

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Romania’s Gross Domestic Product (GDP) is expected to advance 0.5-1 percent in 2010, but there are some opinions that a rise of even 2 percent is possible, the Association of Romanian Business People (AOAR) says in a white paper document released on Thursday.

Business people are expecting inflation to range between 3.5-4 percent, AOAR Chairman Florin Pogonaru told a news conference where the white paper was delivered.
Government’s deficit should range between 5 and 7 percent of the GDP, and according to the majority of the opinions included in the document, the exchange rate of the local currency, the leu (RON) against the single European currency, the euro, should be RON 4.2 to the euro throughout the year. According to minority opinions, the rate should be RON 4.4 to the euro, or even RON 4.1.

Unemployment should reach nearly 7.3 percent, while the AOAR current account deficit estimates read 6-7 percent, with small chances of shooting up to 8 percent.
The AOAR white paper mentions an expected current account of 4 percent and anticipates an indebtedness of 28-30 percent. The business people put foreign investment at an estimated four to maximum five billion euros.

Romania is also expected to draw European structural funds worth 1-1.5 billion euros. AOAR argues that 2015 will be the best time for Romania to switch over to the single European currency, anticipating a benchmark rate of the National Bank of Romania (BNR) of 7.25 percentage points, with a predictable minimum of 5 percent.

AOAR, which turns 15 this year, also recommends some macroeconomic measures, as it is expecting Romania to be subjected to growth pressure as a result of the developments in the financial market, of economic aid packages to the EU member states being reduced, of the world commerce recovering, of the developments in energy prices, of the budgetary restrictions to which Romania has committed itself under its agreement with the International Monetary Fund (IMF) and the European Commission, and as a result of the public sector restructuring.

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