The Romanian economy will shrink by six per cent this year and not by four per cent as previously anticipated, the revision being prompted by the unexpected plunge of the GDP in Q1 (6.4 per cent compared to the previous estimation of 2.5 per cent), reads the most recent assessment done by the economists at Citi Romania, Agerpres informs. Citi Romania economists currently forecast a current account deficit of nearly 6.5 per cent of GDP for 2009, compared to the 12.3 per cent reported in 2008.
The implications of the unexpected contraction of the Romanian economy in the first quarter are, in the opinion of Citi Romania, the following: the current account deficit will probably be lower, the fiscal performance will most likely be affected by less revenues and the Central Bank of Romania could be better stimulated to cut the key0interest rate. A first impression is that, while the first implication might act positively upon the local currency, the following two would have negative effects.
