BNR Vice-Governor: The 2-pct economic growth for 2011 is a ‘realistic’ estimate


Vice governor with the National Bank of Romania (BNR) Cristian Popa on Friday said the 2-percent economic growth estimate for 2011 is ‘realistic’ and represents a reasonable compromise for drafting a fiscal budget that should report good performances.

‘I think the 2-percent economic growth estimate for 2011 is realistic and combines very well the pessimist versions spread by some analysts and some much more optimistic versions circulated by others. Figures ranged between over three and below two percent. For now, I think relying on a figure put at around 2 percent is a reasonable and realistic compromise both for drafting a fiscal budget that should report good performances and for reporting a good balance between predictions and salary evolution,’ Popa explained.

As regards the pessimistic estimates, the BNR official pointed out talks need to be further carried out in order to compare all the existing figures. ‘The 2010 economic decline estimates of minus 3 percent have been, so far, circulated by EBRD. I believe such estimates are rather pessimistic. It is hard to say where we shall meet. We will probably carry out more detailed debates on figures.

For now, we do not even have the data corresponding to the second quarter. It is highly probable the measures implemented for the public sector employees will determine a contraction. We believe the impact will be the 2-percent negative territory of the GDP,’ Cristian Popa underscored. BNR Vice-governor Mugur Isarescu on Friday presented the quarterly report on the inflation rate that showed the rate preserved in Q2 2010 the level targeted by BNR.

The factors that had an impact on the rise in the inflation rate were the sped up annual increase in the administered prices (increasing prices of drugs, the base effect associated to the natural gas tariffs), temporary pressures on leu depreciation, volatility of the oil price and downgrade of the inflationary predictions.
The decrease in the inflation rate was driven by the persistent demand deficit, the reduction of the unitary workforce costs, the reduction of the profit margins of the producers and tradesmen, the favorable evolution of the external prices.
According to Isarescu, the deflationary process had a normal evolution in Q2. BNR projects the annual inflation will reach 7.8 percent in 2010 and 3.1 percent in 2011.

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