The European Bank for Reconstruction and Development (EBRD) has issued a report that assesses growth prospects for states from East and South- East Europe to Central Asia.
Romania is on the right track after two years of recession, and a modest growth will be expected this year. Exports have been on a growth path and industrial production was up more than 7 percent in May 2011, compared to the same period of 2010. The report states that even the construction sector is starting to turn around.
However, the new precautionary agreement of EUR 5 billion with the IMF, European Commission and World Bank, will hamper growth in domestic demand, although it will reduce fiscal vulnerabilities. Consequently, private credit growth was only 3 percent as our economy is slowly but steadily pulling out of the recession.
EBRD projects that the growth rate of Romania’s GDP will be 1.9 percent in 2011 and a further 3.8 percent in 2012. The average inflation rate is forecasted at 6.7 percent, from the 6.1 percent value of 2010. Furthermore, the fiscal balance (deficit) will reach a negative 4.4 percent of GDP in 2011, from the negative 6.5 percent reported last year. The current account will reach negative 5 percent of GDP, according to the latest forecast, from the negative 4.2 percent recorded in 2010. Foreign Direct Investments are forecasted to reach 2.9 of GDP, up from the 2 percent value recorded in 2010.