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March 24, 2023

Risk of recession. GDP on decrease, INS reports

The Central Bank (BNR) forecasts a slight return to growth  in Q4, which could take the annual GDP growth somewhere between 0.5 pc and 1 pc.

The Gross Domestic Product (PIB) decreased by 0.6 pc in Q3, compared to the similar interval of 2011, and by 0.5 pc against the previous quarter, so economic growth at nine months was limited to 0.2 pc, indicating a risk of stagnation, if not recession in 2012. “According to preliminary estimations, GDP in the third quarter of 2012 was, in real terms, 0.5 pc lower than Q2 2012 (seasonally adjusted data). Compared to the similar quarter of 2011, the Gross Domestic Product registered a decline of 0.6 pc (unadjusted series) and 0.8 pc (seasonally adjusted data),” reads a press release issued by the National Statistics Institute (INS).

In the first nine months, the GDP advanced, compared to January-September 2011, by 0.2 pc unadjusted series and 0.4 pc seasonally adjusted data. Also, Eurostat, the statistical office of the European Commission, released wrong data about Romania, in a press release regarding the evolution of the Gross Domestic Product of the EU in Q3, posting growth rates of 0.5 pc against the second quarter of this year and 0.8 pc compared to Q3 2011. Later, Eurostat withdrew from its internet page the communiqué regarding the GDP during the third quarter. “We initiated the data correction procedure. The data announced by the National Statistics Institute of Romania are correct. The rectification of data for Romania does not affect the growth rate announced for the European Union,” Christine Gerstberger, economist with Eurostat told Mediafax.Analysts quoted by Ziarul Financiar indicated for Q3 decreases between 0.4 and 0.6 pc, but only few predicted that the economic growth rate at nine months would collapse to just 0.2 pc. In these conditions, analysts anticipated that the economy would experience a modest increase or even recession this year. “The second half of the year will probably bring negative evolutions in terms of the economic activity. Our forecast shows a significant deterioration of the GDP evolution in H2 2012, generated by the very poor agricultural output (draught and the unfavourable statistic base effect, after a very good year 2011), as well as a deterioration of external demand against the background of negative evolutions in the European economy. Our economic growth forecast for 2012 remains unchanged at 0.5 pc,” explains Ionut Dumitru, president of the Fiscal Council and chief economist of Raiffeisen Bank, quoted by Hotnews.ro. Another economic analyst that made worrying predictions is Ilie Serbanescu: “This is not about base effect, draught or poor agricultural performance. It is about the decline of the economy, which obviously is going on for some time, and the trend will continue.” According to Serbanescu, there is no reason for the Romanian economy to pick up or even stagnate, and it might very well end 2012 in the negative territory, despite official forecasts about a slight increase. The current situation of Romanian economy is determined by the enforcement of the programme with the IMF, whose “cuts” can only result to economic decline, he explains.

Groningen: We talk too much about potential and too little about concrete things

In his turn, the president of Raiffeisen Bank and of the Foreign Investors Council (FIC), Steven van Groningen believes that agriculture’s results and the lack of predictability certainly contributed to the GDP decrease. “It is difficult to comment, I did not see the details, but anyway this is not good news and we should consider the factors that generate economic growth, actually,” Groningen said. According to the bank official, it is very important for us to think about how Romania’s future will be influenced from an economic point of view and to find solutions with this regard. “The data released by the National Statistics Institute should be a warning signal for authorities, which must understand that, if we do nothing, we will obtain nothing,” the chief economist of Volksbank Romania, Melania Hancila warned yesterday.Vasilescu: Romania fares bad from an analytic point of viewIn his turn, Adrian Vasilescu, counsellor of the governor of the National Bank of Romania (BNR), expects the Gross Domestic Product (GDP) to advance by 0.5 to 1 pc, the BNR official told Agerpres yesterday. “The exact data on the influences of economic sectors upon this result of the GDP will only be known to us on December 6. There are millions and millions of calculations, of experts that work with dozens of computers throughout the entire Europe. As we speak now, we are still missing a picture, that of the European Union, which will come from the European Statistical Office during the afternoon. Then we will better know how we fare. I think that, from a comparative point of view, we do not fare bad in this picture. We fare bad from an analytical point of view, when we analyse us against ourselves,” Vasilescu explained. According to the BNR expert, there are three setbacks in the data released yesterday by the INS, but if we look more carefully we can see that the cumulated GDP of Q1 plus Q2 plus Q3 presents two positive signs as well: the 0.2 pc increase in unadjusted series and the 0.4 pc in adjusted series. “We expect a slightly higher increase in Q4, which could take the GDP (increase) for the whole year somewhere between 0.5 and 1 pc,” Vasilescu added. Asked if he expects an increase of aggregate demand in Q4, he said that in Q4 there has always been a jump in this sector, “especially in terms of consumption, because two traditional holidays for Romanians are in this quarter4 – Christmas and the New Year – and the shopping ecstasy in Q4 give a boost to the GDP,” Vasilescu concluded.

Erste: Euro zone recession affects the local economic growth

Romania’s economy will probably stagnate this year because the euro zone will enter recession, the experts of Austrian group Erste warn, quoted by Mediafax. “We revised the economic growth forecast for this year to 0 pc, from 0.7 pc anticipated by us previously, because risks have started to materialise,” reads a note issued by Erste analysts. Agriculture probably had the most severe negative impact upon the GDP evolution in Q3, and the recent deterioration of the industrial output and of activity in the construction sector worsened the prospects even further, according to Erste analysts. The situation of the euro zone will affect Romania’s economy next year too, Erste anticipates.



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