Romania's economy is still riding wave of development, central bank says

Romania's economy is still going well in spite of recent foreign shocks which affected it, central bank's governor said, adding the lender will not tailor its inflation target for 2008, according to an interview shown on The Money Channel.

Romania's economy has slow down in its development to 5.8 percent in the first half of the year, versus 7.7 percent in the same period last year, mostly owing to the drought this summer which plagued summer and fall crops in most regions of the country.

People should not panic, governor Mugur Isarescu said, adding the situation is under control, especially concerning the inflation.

Isarescu deems the annual inflation will remain above 5 percent in December. An optimum mix is a corroboration of tight fiscal and income policies and a temperate restrictive monetary policy to avoid paving the way to a new leu appreciation which cannot be sustained, according to the governor.

Romania's economic growth rhythm will brake 1-2 percentage points to avoid the overheating of the economy, Isarescu said in an interview for the Market News International press agency two days ago.

However, Isarescu noted the economic growth will only slow down a bit, not stop, stimulated especially by the continuous investments in the country.

The slow pace of the country's economy was noticeable this year when the Gross Domestic Product rose 5.8 percent in the first half and is estimated to hike 6 percent the most, compared to the 7.7 percent increase last year, the governor noted.

However, the slowdown was partially offset by the boom in the constructions industry, Isarescu said.

He stressed the central bank is to adopt a prudent attitude towards the economy in a bid to protect it from indirect effects of the credits crisis on the U.S.
housing market which has had dramatic impact on global markets, including the stocks ones.

The Money Channel