WB’s Pauna: Inflation will not exceed 2.5-3 percent in Romania

Short-term inflation in Romania will not exceed 2.5-3 percent, senior economist of the World Bank Bucharest Office Catalin Pauna told a news conference on Thursday that released in Bucharest the July 2010 edition of the World Bank’s EU10 Regular Economic Report.

The recent 5-percent rise in the Value-Added Tax in Romania will not trigger any alarming inflation in the long run either, said Pauna. ‘The inflation triggered by the rise in the VAT is only 2.5-3 percent, but that will go down in some months’ time,’ he said. The World Bank’s report, which is published three times a year, monitors macroeconomic and reform developments in 10 European Union member states – Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia – and provides in-depth analyses of key policy issues.

It says that economic upturn is weak. Private consumption and private investment are likely to add to growth only from 2011 onwards. And post-crisis growth is likely to stay below pre-crisis growth in view of reduced capital flows, restrained credit growth, and structural adjustments in the economy. Economic activity in Bulgaria, Estonia, Hungary, Lithuania and Romania is set to stagnate, as the unwinding of imbalances continues.

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According to the WB report, assuming appropriate policy responses will safeguard financial market stability, the EU10 countries are projected to expand by 1.5 to 1.7 percent in 2010, and 3.1 to 3.6 percent in 2011. The growth advantage of the EU10 region over the EU15 region – Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, and the United Kingdom – could increase from around 0.5 percent in 2010 to 1.5 percent in 2011.

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