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Raiffeisen Bank estimates economic contraction of 6 pc this year

Raiffeisen Bank Romania has revised its estimates on the Romanian economy's contraction in 2009 from 4 per cent to 6 per cent. The decision was taken because of the deterioration in the construction and the agricultural sectors' outlook, Ionut Dumitru, the bank's chief economist told Mediafax, underlining that this is the optimistic scenario.

‘In Q3 of 2008 Romania was still registering one of the fastest economic growth rhythms in Europe, its GDP growing at an annual rate of 9.2 per cent. In Q1 of 2009 the economy contracted at an annual rate of 6.2 per cent, with that being the steepest drops registered among the large economies in Central and Eastern Europe (excluding the Baltic states)' a report authored by Raiffeisen Bank reads. Dumitru considers that the construction sector's outlook has deteriorated very much against the backdrop of the delays in the announced state investments. He pointed out that the investment programme announced by the Government has very small chances to come to fruition considering the budget execution in the first three months of the year.

For the end of 2009 the Raiffeisen Bank analysts estimate a budget deficit of 6 per cent of GDP, surpassing the 5.4 per cent of GDP level registered in 2008. Nevertheless, they estimate that the budget deficit would drop to 4 per cent of GDP in 2010. For Q2 Dumitru estimates a GDP contraction in the ballpark of 6-7 per cent. He explained that he anticipates a contraction of approximately 8 per cent in Q3, one that nevertheless depends on the developments in the agricultural sector which currently shows ‘very bad signs.' Likewise, the economist pointed out that the main effect will be negative in the July-September period.

According to the Raiffeisen report, Romania's nominal GDP will total EUR 121 bln this year, down from EUR 136.8 bln in 2008. For 2009 the bank's analysts see an economic growth of 1 per cent and a nominal GDP of EUR 140.9 bln. In what concerns unemployment, the Raiffeisen analysts see a growth from the unemployment rate of 4 per cent in 2008 to 6.3 per cent this year and 7.2 per cent in 2010, being more optimistic than the IMF. The IMF economists estimate that the unemployment rate will grow to 8.9 per cent this year and to 9.7 per cent in 2010.

At the same time, the Raiffeisen economists consider that the current account deficit will register an adjustment from 12.3 per cent of GDP in 2008 to 6.5 per cent this year and 6 per cent of GDP in 2010.

 

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Tags: contraction economic estimates raiffeisen

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