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SAR report: Economic uncertainty, dominant note in 2009

Financial blockages, exchange rate volatility, expensive loans and decreasing demand are the main challenges facing Romania in 2009, against the background of the world economic crisis, reads the annual forecast and report of the Romanian Academic Society (SAR) made public on Monday and dubbed 'Romania 2009: the Economic Crisis and the State of Law."

According to the SAR experts, 2009 will witness the highest volatility of the macro indicators in the past decade.The GDP level is seen as ranging between a minimum of -3.5 percent and a decent growth of 3 percent. The general opinion however is that the GDP will not go down in 2009.

The exchange rate and the inflation rate at year-end are hard to predict in a context of high volatility. Prospects point to 3 or 4 percent depreciation of the leu as compared to the present exchange rate. Some experts estimate the leu will strengthen against the euro to the value of less than 4 lei for 1 euro, while others forecast the value of 5 lei to 1 euro. The inflation rate is seen at 5.8 percent but some experts say it might exceed 8 percent.

Most analysts see the Government unable to reach its budget deficit goal of 2 percent, which they would rather place at 4.4 percent, even at 5.5 percent. As regards the current account deficit, it might range between 10.5 percent and 11 percent. SAR experts believe the unemployment rate will stand within reasonable limits, below 10 percent.

Uncertainty is the dominant feeling as regards the evolution of the Bucharest Stock Exchange (BVB) and of the real estate market. The BVB index might recover or continue to drop until end-2009. Most analysts predict a further drop in prices on the real estate market to values ranging between -5% and -40%.

The experts that have worked on the SAR report have indicated several measures the Government should include in its anti-crisis plan, most of them convergent with the solutions already considered by the Executive.

So, according to experts, control over public expenditure should be toughened and salaries in the public field should be frozen throughout the entire year. The budget deficit should be kept at less than 4 percent of the GDP at all costs, or facing the risk for the state to absorb most of the resources aimed for the private field.

Half of experts believe that an accord with the IMF should be closed for the financing of the current account deficit and of the budget deficit, and this accord should be anchored in a structural reform plan on the medium term, agreed on with the EU and Romania's other international partners.

 

Sursa: http://www.actmedia.eu

Tags: percent deficit economic report experts should euro bvb

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