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April 20, 2021
BUSINESS

BCR cuts Romania’s economic growth outlook to 0.7 pc in 2012

Likewise, the bank’s analysts estimate that the budget deficit target may be surpassed by 0.8 per cent against the backdrop of general elections and hike their inflation rate estimate to 4 per cent.

Romania could miss this year’s budget deficit target of 3 per cent (based on ESA 95 standards) by 0.8 per cent, against the backdrop of general elections and of the downward revision of its official economic growth forecast to 1.2 per cent, Banca Comerciala Romana (BCR) informs. “For the following year we estimate a deficit of 3.3 per cent,” BCR’s analyst Eugen Sinca stated yesterday during a press conference, Mediafax reports. BCR’s macroeconomic report shows that the deficit target was attained in H1 against the backdrop of cuts in investment expenditures and delays in the payment of suppliers. Likewise, BCR analysts hiked their inflation rate estimate for this year from 3.7 to 4 per cent, the decision being influenced by the low agricultural production, however they do not rule out a level of 4.2 per cent after the prices of natural gas are hiked at IMF’s request, Eugen Sinca added. He pointed out that the inflation rate is also strongly influenced by the exchange rate given the fact that prices rise when the RON depreciates yet a drop in the exchange rate is not followed by a drop in prices. BCR analysts forecast an inflation rate of 3.5 per cent in 2013. The annual inflation rate stood at 3 per cent in July after a month-on-month price hike of 0.59 per cent. The National Bank of Romania (BNR) forecasts an inflation rate of 3.2 per cent this year, the target being set at 3 per cent plus/minus one percentage point. BCR analysts also revised downward their economic growth forecast for this year, from 1.2 to 0.7 per cent, mainly because of the fact that agricultural production fell below expectations. The outlook for next year has been lowered from 2.9 to 1.9 per cent against the backdrop of uncertainties in the Euro Area. “If Romania had had a normal development in the agricultural sector this year we could have had an economic growth of approximately 1.1 per cent,” BCR’s new chief economist underlined. He pointed out that this estimate is very good for Romania compared to the Euro Area, the latter set to close the year with an economic drop of 0.2 per cent. In his turn, BCR’s chief economist Lucian Anghel stated that Romania’s evolution in the second quarter was better compared to that of other countries. For 2013 the BCR analysts estimate a GDP growth of 1.9 per cent, down from the initial forecast of 2.9 per cent, and point to a possible economic growth of 2 per cent in the following years. “If we look at the quarter-on-quarter economic growth registered in the second quarter, we are in the top echelon of Euro Area countries when it comes to economic growth and we maintain that one percentage point lead over the Euro Area. Few countries will have an economic growth of over 0 per cent,” Anghel pointed out.

Exports Hurt

Eugen Sinca also pointed out that the Euro Area remains under the effects of the sovereign debt crisis, a fact that will affect Romania’s exports, since 50 per cent of them go to Euro Area countries, and Romania’s FDI, 80 per cent of the latter coming from Euro Area countries. “We believe that the Romanian economy’s growth will be supported by household consumption, against the backdrop of the 8 per cent and 7.4 per cent salary hikes in June and December respectively, and of the government’s decision to pay back the pensioners’ health insurance contributions,” Sinca stated. He pointed out that he refers to retail trade and services. Sinca pointed out that Romania should maintain a high rhythm of investments in infrastructure, being essential for it to come back with major projects in this domain and thus to score points in the eyes of international investors. These projects could include privatizations, infrastructure development through public-private partnerships, as well as a possible Eurobond issuance.

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