EBRD foresees just 1 percent economic growth in Romania next year

“After years of robust growth, Romania is currently experiencing a significant economic slowdown, owing to declining exports, falling construction activities and slowing credit growth. However, international financial institutions have stepped in to help mitigate the impact of the crisis and Romania's medium-term outlook remains favorable with good potential for the resumption of growth once global conditions improve,” said Peter Sanfey, EBRD lead economist.According to the same study, the economies of Central and Eastern Europe are expected to contract by an average of 6.3 percent this year following steep output declines in the first half of the year. Signs of positive growth in the third quarter of this year suggest that the recession is now bottoming out in many countries of the EBRD region. However, any upturn next year is likely to be fragile and patchy. Moreover, the report suggests that there are likely to be significant cross-country differences in output growth next year, masked by an average growth rate for the region of about 2.5 percent.”It is clear that the social costs of the global economic crisis are likely to be felt next year, when corporate bankruptcies and unemployment will continue to rise. Growth over the medium term in the EBRD region is also likely to be below the trend experienced over the last decade,” said Erik Berglof, EBRD chief economist.Factors restraining growth in 2010 include the subdued pace of the export market recovery, particularly in the Euro area, and continuing tight credit conditions, as banks continue gradually to shrink their assets in the region and as lending to households and small firms remains constrained by rising non-performing loans.
Dana Ciuraru