For the first time after 2008, Romania could record a bigger economic growth then Poland’s in 2013, Poland being the only EU member state that did not fall into recession during the crisis, according to the forecast of the International Monetary Fund (IMF). The Fund maintains its forecast of 0.9 per cent growth this year and 2.5 per cent for next year for Romania, which were announced by the mission visiting Bucharest mid-August for the sixth review of the precautionary agreement between the Fund and Romanian authorities. Romania recorded the last growth bigger than Poland’s in 2008, the year when the global financial crisis sharpened, when the economy grew by 7.3 per cent compared to 5.1 per cent for Poland. The fact that Romania could overtake Poland is primarily due to the slow-down of the Polish economy. The IMF revised its economic growth forecast for the biggest country in the East of the EU more drastically than in the case of Romania. In its April report, the IMF was anticipating a GDP growth of 3.2 per cent for Poland and 3 per cent for Romania, revised down to 2.1 per cent for Warsaw and 2.5 per cent for Bucharest.Poland’s economy is slowing down because of the debt crisis in the eurozone and of the measures for controlling necessary expenditure for reducing budget deficits to less than 3 per cent next year, according to EU requirements. The IMF expects Poland’s economy to grow by 2.4 per cent this year and 2.1 per cent next year, says the 2012 Global Economic Prospects report. According to the IMF Fiscal Monitor, Romania needs financing this year representing 10.9 per cent of its GDP – 8.7 per cent borrowings falling due and 2.2 per cent budget deficit and, next year, the financing will represent 10.6 per cent of the GDP, of which 8.8 per cent will be loans falling due and 1.8 per cent of the GDP estimated budget deficit. In the region, Hungary (-1 per cent), Croatia (-1.1 per cent), Serbia (-0.5 per cent), Slovenia (-2.2 per cent) and the Czech Republic (-1 per cent) will record economic contraction this year, according to the IMF. Slovenia’s GDP will continue to shrink this year as well, but at a slower rate of 0.4 per cent. Turkey (3 per cent), Slovakia (2.6 per cent) and Bulgaria (1 per cent) will register growth this year. These countries will have a better economic evolution next year, with an acceleration of growth to 3.5 per cent for Turkey, 2.8 per cent for Slovakia, 2 per cent for Serbia, 1.5 per cent for Bulgaria, 1 per cent Croatia and 0.8 for the Czech Republic and Hungary. As for emergent economies, the Fiscality Report shows that, on the average, the fiscal deficit and the public debt are notably lower than of advanced countries’. It is understandable that these states would suspend fiscal adjustments in 2012 and 2013: these countries’ average fiscal adjustment, quite important in 2010 and 2011, will be almost zero this and next year. This is fine, but there are a few emergent economies that, on a medium term, will have to make important efforts to reduce their still high deficits and public debts. ‘It is also important that some of the emergent economies still have primary deficits (deficits except expenditure with the interest) in spite of a strong economic growth for several years. These countries are especially exposed to the risk of experiencing a slow-down of economic growth on a medium term,’ said Carlo Cottarelli, head of the fiscal affairs department.
IMF lowers global growth outlook
The International Monetary Fund is predicting further slowing in the global economy, the Voice of America reports. The assessment comes in a closely-watched economic forecast released Monday, in which the Fund blames uncertainties with fiscal policies in the United States and Europe for the gloomy outlook, voanews.com reports. The IMF says there is an “alarmingly high” risk of a global slowdown with an 80 per cent chance of recession in the Euro zone next year. The global economy is predicted to rise 3.3% this year and 3.6% next year. In its previous forecast, three months ago, the IMF pegged growth this year at 3.5% per cent and 3.9% in 2013. The fund recommends that after next month’s presidential and congressional elections, America will have to act quickly or economic recovery will be derailed. At the beginning of 2013, a number of significant tax cuts expire and automatic spending cuts go into effect unless U.S. policy-makers act.While there is strong concern about Europe, the United States and Japan, the Fund also expects an economic slowdown in China and India, two countries whose economic booms helped the world recover from the most recent recession.The latest IMF report cautions that overall “confidence in the global financial system remains exceptionally fragile.” The IMF sees China continuing to be the primary driver of growth among developing Asia economies, as officials there accelerate approval of public infrastructure projects. Economists warn some of those Chinese state investments are unsustainable and inefficient in the long term.Also, the IMF forecast is more upbeat positive for sub-Saharan Africa, where regional growth is forecast to average above five percent, except for South Africa, which is hampered by its ties to Europe.The International Monetary Fund, which has 188 member countries, warns of continued uncertainty in the Middle East and North Africa amid political and economic transitions in the aftermath of the Arab Spring. In that region, real GDP growth is forecast to slow to about 1.25% this year, but expected to rebound moderately in 2013.The forecasts were issued as thousands of people, including central bankers, finance ministers and private sector executives gathered here for a week of meetings to discuss global economic issues.