Erste Group revised downward the growth estimations for Romania's economy

Erste Group revised downwardly the growth estimations for Romania, from an advance by 1.2 per cent to a contraction by 2.1 per cent this year and from 3 per cent to 2 per cent in 2010, within the context of worsened worldwide demand evolution and confidence of consumers in Central and Eastern Europe.

This situation has made the analysts of the Austrian group, cited by Mediafax, to reduce the estimations of economic growth for the EUR zone and for a few states in Central and Eastern Europe. "Therefore, we anticipate that the economy of the EUR zone shall contract by 3.6 per cent this year, Romania's and Serbia's by 2.1 per cent, Slovakia's by 1.2 per cent. Hungary's economy shall decrease by 5.1 per cent and Croatia's by 4.5 per cent," Erste Group report reads. Erste analysts also revised downwardly the estimations related to the current account deficit, from 9.4 per cent of GDP to 8.2 per cent of GDP in 2009 and from 8 per cent of GDP to 7.3 per cent of GDP in 2010. Last year, the current account deficits accounted for 12.3 per cent of GDP.

Regarding the budgetary deficit, the analysts maintained their forecasts for 2009 at 4.6 per cent of GDP, but they revised upwardly the estimations for 2010, from 3.3 per cent of GDP to 4 per cent of GDP.

"The Government borrowed RON 2.62 bln since the beginning of the year, most on short term, which is more than double compared to 2008, in order to cover the funding needs for the budgetary deficit, which are increasingly high," most recent report published by Erste reads.

The unemployment rate deepens to 7.2 pc

Erste worsened the estimations also related to the unemployment rate. Thus, the analysts revised upwardly the forecasts related to unemployment rate from 6.2 per cent to 7.2 per cent in 2009, and from 5.6 per cent to 6.8 per cent for next year.

"The gross available revenues in Romania shall be affected by the slowdown in the economic activity and they could register an advance lower than zero, compared to the level estimated for 2008, 19 per cent. Considering our core scenario for 2009, which includes a strong raise in he unemployment rate to more than 7 per cent and an annual growth rate of average gross salaries close to zero, a significant contraction in the money dispatched from abroad, as well as 8 to 10 per cent advance in social assistance, the available gross income may reduce by an annual rate of 2-4 per cent," as Lucian Anghel, BCR chief economist, wrote in the report. He mentioned that the evolution of the gross available report depends highly on the future policy of salaries and social insurance to be pursued by the Government, mainly considering that 2009 is an electoral year.

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