BCR short note: 1Q11 real GDP – flash estimate

Our forecast was 0.8% y/y while market consensus stood at 0.2% y/y. No details have been released about the structure of real GDP but exports probably made again a positive contribution to the economic growth. After many disappointing quarters, gross fixed capital formation and households consumption probably entered positive territory as the negative effect of the fiscal consolidation package faded away.

In light of the most recent data, our estimation regarding an economic growth of 2% in 2011 and 3.9% in 2012 is realistic. The NBR could keep key rate unchanged at 6.25% in 2011 and start a gradual tightening cycle in 1H12 due to concerns about the inflation rate and the need to counterbalance a possible fiscal slippage ahead of 2012 elections. Therefore, we foresee the key rate at 6.75% in June 2012.