PM forecasts eight pc economic growth for 2006

“We must expect the numbers coming from the National Statistics Institute (INS) but in my opinion we will surpass eight per cent in 2006,” said Tariceanu, during a show on Realitatea TV channel. The Prime Minister said that Romania will surpass the economic gaps towards the rest of the EU countries if it will accomplish during the current year, three things: political stability, maturity on the political stage and responsibility. “If 2007 will be marked by early elections or serious political instability then the economic growth will slow down, especially the investments in infrastructure, the public health system, the education system and salaries,” said Tariceanu.

The economic increase in 2006 was estimated to 7.3-8.3 per cent, regarding the fact that the increase rhythm for the first nine months of 2006 was of 7.8 per cent. “From the practical experience, the annual economic increase stands at around the value registered after the first nine months of the year, plus or minus 0.5 per cent,” said in December the general director of the National Accounts Department, within the INS, Adrian Ciuchea.

The Gross Domestic Product increased in the third semester of 2006 by 8.3 per cent comparing with the same period of 2005, surpassing the estimates of the authorities, so that the increase rhythm of the first nine months of 2006 accelerated to 7.8 per cent, according to the data issued by the data provided by the INS.

The National Forecast Commission previously estimated an increase rhythm for Romania’s economy of 7.8 per cent.

During January-September 2006, Romania’s economy grew by 7.8 per cent in real terms, amounting to EUR 65bln.

In the third quarter of 2006, Gross Domestic Product reached EUR 26.2bln, rising by 8.3 per cent comparing with the similar perriod of 2005, according to the preliminary readings of National Statistics Institute (INS).

The Gross Value Added of Romania’s economy totaled RON 201.5bln in the first three quarters of 2006, advancing by 7. per cent y/y in real terms, while the value of indirect net taxes of subsidies increased by 7.2 per cent y/y to reach RON 28.1bln. The fast dynamics of both components arose from the expansion in the volume of activity, determined by fast increases in labour productivity, as Romania underwent important structural changes stirred by EU accession as by January 2007.

On the production side, the agriculture was the only sector of economy which continues to disappoint, despite mild weather, and this reveals important structural deficiencies. In the first three quarters, agriculture grew by a modest 3.5 per cent comparing with 2005 against the 12.6 per cent decline in Q1-Q3 2005, when it was seriously affected by floods. Although agriculture performed poorly in 2006 as well, it increased its contribution to the formation of value added in economy from 5.3 per cent in Q2 to 13.3 per cent in Q3. This is far from being good news considering our weather-based agriculture, as the GDP extends its exposure to conjuncture factors.

On the expenditures side, the household’s consumption maintains its buoyant rhythm started in 2004, posting a 12 per cent increase since the beginning of 2006, as it is fueled by fast rising salaries and consumer loans. The National Bank tried to contain the sharp expansion of consumer lending, however the results were rather limited due to the high demand in the market and harsh competition in retail banking.

Public consumption recorded modest increases during January- September, advancing by 2.6 per cent, although the fiscal deficit is targeted to reach 2.5 per cent of GDP in 2006. The sharp rise in household incomes boosted consumption and investments, but the internal supply was unable to satisfy them and determined the widening of net exports shortfall.

Source: nineoclock.ro