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BNR about 2011: the exchange rate euro/dollar – 1.26; Euribor – 1.16%

A level of Euribor ( three months) of 0.79% in 2010 and 1.16% in 2011; a rate euro/dollar estimated at 1.26 during 2011; requests for salary increase, price increase and slowing down of final consumption are only some of the estimates of the National Bank specialists, useful for the moths to come.

Moreover,they discuss the unpredictable feature of the fiscal policy which represents a factor permanently generating risks,according to the Report regarding inflation.

The evolution of the interest rate EURIBOR ( three months) was revised downwardly by the specialists of the National Bank while the values of the annual rate of inflation IAPC are expected to be superior to those in the previous estimate under the impact of the euro depreciation against the American dollar.The current prognosis means the stabilisation of the EUR/USD rate to values close to the present ones,1.27 for the rest of the current year and 1.26 for 2011, being confirmed by expoert prognosis on an international level.

The evolution scenario for the price of oil on the international market reflects the anticipation of the gradual coming back of raw materials demand, the expected values being inferior to those in the previous projection.

The indirect impact of the increase of VAT on the inflation rate – effects which do not dissipate necessarily after four quarters may be:salary increase requests due to the decrease in purchasing power,increase of selling prices by companies which sell products with reduced or no VAT to cover the increase of production costs,recovery of margins initially lost by producers by the non-inclusion of VAT in prices,etc.

« The recent measures taken by the authorities referring to layoffs and salary reductions in the public sector will have an unfavourable effect at the level of end consumption. Moreover, the increase of impredictability of the fiscal policy contributes to a deterioration of trust at the level of households and companies regarding economic perspectives,thus reducing the investments demand » the BNR specialists show.

At the same time, BNR shows, we could see inflation pressure on the part of import prices.Due to the tensioned situation in Greece, the worsening of the investors' perception about the risk associated to placements in emerging economies in Europe has triggered an episode of depreciation of the national currency,which had as effect the recording of slidings of import prices dynamics.

Moreover,the marginal upward reevaluation of the inflation prognosis in the euro zone for the first part of the period contributes to the projection of a higher contribution of import prices as regards inflation CORE2. Besides the substantial influence of VAT increase, the inflation pressure of fuel prices in 2010 is due to the adoption of a scenario of evolution of the exchange rate EUR/USD which includes a more favourable dynamics of the American currency against the one included in the previous projections.

Investments will contribute positively to GDP increase only in the second part of 2011

The scenario for the evolution of the euro zone includes the modest coming back , under the conditions of a nonfavourable dynamics of domestic demand. Comparatively to the previous projection,the prognosis for the economic increase for the current year was kept,andthe value for 2011 was revised downwardly by 0.1 percentage points. « The roughing up of creditation standards for the population continued with lower intensity in Q1 2010 with the exception of those regarding the real estate credit which were not altered. The credit institutions anticipate a relaxation of creditation standards for both categories of credits.

The projection anticipates the slowing down of end consumption at reduced levels for the first part of the prognosis horizon, as a result of the restrictive effects brought about by measures implemented by the government to reestablish the budgetary balance,with a view to its gradual launching under the impact of the gradual remaking of trust in the economy as the signs regarding the recession period have passed and relative relaxation of financial constraints » the quoted document says.

Thus, starting with the second part of 2011 it is expected that assets contribute positively to the increase of GDP. Present uncertainties referring to the capacity of the authorities to implement the measures necessary to reduce the budgetary deficit under the imposed limit by the Treaty of accession to the European Union as well as the impact of those measures on the domestic economic activities are considered as being significant.

Unpredictable character of fiscal policy is a factor generating risks

Generally speaking,the unpredictable character of fiscal policy is a factor generating risks and has an increased relevance for the period of reference of the current projection. The increase of transperancy and predictibility in the fiscal domain would contribute to the consolidation of trust both in the business environment and among consumers, as they would facilitate the decisions connected to business plans and consumption decisions. At the same time, the private sector could benefit from the reduction of financing costs, as commercial banks will adjust the creditation standards once the general risk associated with the economic environment drops.

Sursa: http://www.actmedia.eu

Tags: inflation which prognosis projection prices fiscal increase about euro dollar euribor bnr

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