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May 16, 2021

European Union to go into recession next year

Romania’s economic growth will slow down next year to 0.5 pc, from 2 pc in 2011, because of tough austerity measures and the exposure to the European debt crisis, according to a fresh forecast of the Economist Intelligence Unit (EIU), quoted by realitatea.net. Romanian authorities are more optimistic and speak of a 1.5 pc growth rate in 2012. The institute also warns that resistance to austerity measures might create instability.

In the latest evaluation of the accord with the International Monetary Fund (IMF), Romanian authorities and financial institutions maintained the 1.5 pc economic growth forecast for this year, but significantly lowered the figure for next year, to approximately 2 pc.

According to the EIU report, the Balkan region – which includes Romania, Bulgaria, Croatia and Serbia – is significantly exposed to the problems of Greece, because of investments, commerce, remissions and banking ties. The EIU anticipates for this region an economic growth of 1.5 pc this year and only 0.3 pc in 2012. Inflation will slow down to 3.7 pc in 2012, from 5.9 pc this year. After a modest advance in 2011, Bulgaria’s economy will stagnate next year.

The institute also estimates that the European Union will go into recession in 2012, with an economic contraction of 0.7 pc, down from an advance of 1.5 pc this year. For the eurozone, the EIU predicts an economic growth of 1.4 pc in 2011 and a contraction of 1.2 pc next year.

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