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Central bank governor: Economic growth 'a bit too high'

Economic growth registered in Q1 2008 is a 'bit too high,' higher than anticipated, but not surprising, governor of the National Bank of Romania (BNR) Mugur Isarescu on Wednesday told the Central and East European Financial Forum in Bucharest.

'There are many signs that economic growth this year will be higher than forecast,' said Isarescu. The 8.2 pct record high economic growth in Q1 2008 reflects a slight overheating of economy, as the GDP went past its potential, BNR vice-governor Eugen Dijmãrescu cautioned in turn. Dijmarescu said that he is waiting for the National Statistics Institute to publish detailed data about the Q1 GDP in order to get a clearer image on whether this economic growth was rather on account of consumption such as 'cars bought on behalf of the firm, under leasing'. The overheating of Romanian economy - as proven by the difference between the effective and the potential GDP - shows there is demand in excess; this difference represents a synthetic aggregate indicator of future inflationist pressure in economy. In the long run, accumulated pressure translates in effective price moves and the deviation of the GDP tends to nil, with the real GDP getting back to the potential level. The GDP estimated for Q1 2008 is 86.745 bln lei (about 24 bln euro), up 8.2 pct from Q1 2007, shows data published by the National Statistics Institute. The 8.2 pct economic growth is higher than the expectations of both economic analysts and Minister of Economy and Finance Varujan Vosganian. The economic growth projection of 6.5 pct for 2008 could be revised upwards by one percentage point if this is a good crop year and given the advance registered in Q1, Minister of Economy and Finance Varujan Vosganian stated recently; the cited official was estimating an economic growth of 7.5 pct in Q1. According to Vosganian, Romania produced in Q1 2008 alone more than in the whole year 2000. Economic analysts expected economic growth to be 7.4 - 7.8 pct in Q1 2008, as to 6 pct in Q1 2007, boosted mainly by the sector of constructions, that witnesses the fastest advance of all economic activities. BNR vice-governor Dijmarescu added that chances of a slash in the monetary policy interest rate reduce significantly if the threat of economy overheating proves real. Asked about a possible rise in the key interest rate to 10 pct, as some analysts suggest, governor Mugur Isarescu just remarked that 'analysts are reliable professionals and Romania now has a bunch of highly professional economic - financial analysts who enjoy BNR acknowledgement.' Sursa: http://www.rompress.ro

Tags: economic growth governor economy bnr euro

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