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Raiffeisen official: Economic growth to resume next year, leu to euro x-rate between 4.2 - 4.4

Next year we expect economic growth to resume, the inflation rate to go down and the monetary policy interest rate to be lowered, Raiffeisen Bank chief economist Ionut Dumitru told Agerpres.

'However, this will be just a moderate economic recovery, as the GDP growth will be hovering around 1.5 pct. The inflation rate will follow a downward trend in 2011, dipping to about 4.5 pct,' said Dumitru.

According to him, the main factors that will contribute to lowering the inflation rate are the lackluster consumption demand and the basic statistical effect of the increase this year of the VAT rate and excise duties.

'The resumption of economic growth will also widen a bit the trade balance deficit and the current account deficit towards 6.5 pct of GDP in 2011,' said the Raiffeisen Bank chief economist.

In his opinion, there are high chances for the monetary policy interest rate and the reserve requirements to be lowered next year.

'Most likely, such measures will be taken in the second half of the year and in the second quarter of the year, respectively (for the minimum required reserves - Editor's note). We expect the key interest rate to stand around 6 pct next year, compared with 6.25 pct at present,' said Ionut Dumitru.

With regard to the banking system, Dumitru believes that there is a high probability that it closes the current year with overall loss, but this will not be very high.

'The increase in bad loans and provisions is the main factor that explains such a result. Expectations for 2011 are for positive outcomes (profit), given that the economy begins to recover and pressure on bad loans and provisions will ease up,' he argued.

According to Raiffeisen Bank estimates, Romania's GDP will shrink 1.5 - 1.9 pct this year.'At the end of this year, the annual inflation rate will be around 7.9 pct, up from the 4.7 pct registered at the end of 2009. The rise in excise duties and the VAT hike from 19 pct to 24 pct are the main factors that took inflation higher this year. The trade balance deficit will be around 5.7 pct of GDP in 2010, a level unchanged from 2009. The current account deficit will remain around the same value,' added the cited bank representative.

Ionut Dumitru also said that he expects the exchange rate to stand around 4.3 lei for one euro.

'In 2011 we expect the leu/euro exchange rate to average of 4.3 and keep within a variation band of 4.2 to 4.4 lei/euro,' concluded the Raiffeisen Bank chief economist.

Sursa: http://www.agerpres.ro

Tags: dumitru around inflation euro economic growth raiffeisen

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