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How financial crisis has affected Romania's economy

It is one year since the United States was hit by the sub-prime crisis whose effects have extended also to the Romanian economy. Which sectors have been hardest hit? Are there business segments that were unaffected?

According to some of the most important individuals in Romania's economy, the entire economic environment has been affected by the sub-prime crisis, while others say that the businesses they run have not been touched by the influence of the global crisis. Initial conclusions show that the capital market was dealt the most powerful blow by the sub-prime crisis, as foreign investors began reducing their investments in Romanian companies. The stock exchange value of companies listed one year ago has now dropped 50 percent, to €16.9 billion. Bankers say that the profitability of the banking system could drop in 2008 by 10-15 percent, which would mean some €120 million lower profits. On the real estate market, prices of apartments dropped by some 10 percent. Real estate developers insist that the main problem they face is a lack of liquidity. 'In spite of all the difficulties that have come up, the Romanian banking system has managed to find solutions to counterbalance external problems and domestic volatility. A drop in banking system profitability is possible, due to international turbulence and competition. I doubt that we will reach last year's profit growth. We could actually witness a 10-15 percent drop in banking system profitability in 2008,' said Radu Gratian Ghetea, President of the Romanian Association of Banks, and President of CEC Bank, quoted by the daily Business Standard. Businessman Ovidiu Tender managed to take advantage of the sub-prime crisis in the United States by acquiring Jetran Air two months ago. 'This was an opportunity, as the company's major shareholder, an American, needed liquidity due to the mortgage crisis, so the value of the acquisition was below the company's potential,' said Tender at the time of the buy. Sursa: http://www.rompress.ro

Tags: crisis economy air cec