Romania’s economic growth drops to 0.8 percent this year on Euro zone woes, says EBRD

The European Bank for Reconstruction and Development (EBRD) forecasts Romania’s economy grew by 2.5 percent in 2011, but the first estimation on economic growth for this year stands at 0.8 percent. In a report issued this week, the World Bank estimated a growth rate of 1.5 percent for 2012.

The Euro zone economic slowdown has already impacted Romania’s exports, and this trend will worsen in the following months, warns the EBRD. The Greek crisis will also impact cross-border banking relations with Romania, where subsidiaries of Hellenic banks are present. 

Romania’s latest CDS spread, which gauges country risk, has decreased from 723.6 basis points in May 1 2009 to 454 bps on January 16 2012.   

Hungary’s economy will contract by 1.5 percent due to uncertainty over the refinancing of the public debt and a possible agreement with the EU/IMF.

Slovenia will slip into recession this year, posting a negative 1.1 percent in GDP, due to stagnating consumption and reduction of investments.      

Ovidiu Posirca

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