EBRD growth forecast of Romanian economy cut to 0.8 percent this year

The EBRD has lowered its estimate on the economic expansion in Romania this year from 1.2 percent of GDP to 0.8 percent and the growth prospects for 2013 have also been reduced, citing the Euro zone slowdown and the recent political crisis as the main factors that hinder short-term gains.

The economic forecast for Romania was cut from 1.2 percent of GDP in EBRD’s May estimate, while the estimate for 2013 fell from 2.6 percent to 1.8 percent of GDP.

The European lender noted that Romania’s economy recovered last year and was on track to record robust growth in 2012, but the weak growth of the Euro zone and the political crisis that has unfolded in recent weeks could harm the economy. However, the loans taken out from the IMF and other international lenders provided an important buffer for the economy.

The EBRD said that Central Europe and the Baltic States (CEB) remain the most exposed to the slowdown in European industrial production and deleveraging by European banks.

The economies of Slovenia, Hungary and Croatia will shrink by 2 percent, 1.3 percent and 1.2 percent of GDP. Meanwhile, Poland and Bulgaria will add 2.9 percent and 1.2 percent to their GDP.

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The lender said that the vulnerabilities of the financial sector constitute the biggest risk in South-Eastern Europe area, which includes Romania, given the majority foreign-ownership of their banking systems and the dependence on funding from abroad.

Ovidiu Posirca