Romania's economy to shrink 4 pct in 2009, according to EC

Romania's economy will shrink 4 percent in 2009, following the 2010 economic growth to be 0 percent (zero), according to estimates of the European Commission's Spring Forecast 2009-2010.

Cutting in the revenues at the disposal of consumers and the restrictions in granting loans will result in the reducing of the internal consumption, while governmental expenditures are going to shrink, reads the estimates of the EC.

Due to the decline in the economic activity, unemployment is going to climb from 5 percent in 2008 up to 8 percent in 2009 and 2010 in Romania, according to the EC forecast.

With the inflationist pressure having softened as following the cut in the price of the raw materials worldwide, the inflation might grow again in 2009, especially because of the significant depreciation of the leu. The BNR's inflation target, of 3.5 percent (+/-1 percent) could be reached late in the year. The record depreciation in the exchange rate in the first months of 2009, together with less pressure for wage growth, is going to result in the improvement of Romania's international competitiveness, appreciates the European Commission.

Romania's budget deficit is expected to drop by 5.1 percent of the Gross Domestic Product (GDP) in 2009, according to estimates of the European Commission. The institution also forecast growth in the budget deficit by approx. 5.6 percent of the GDP in 2010, with the deficit to possibly drop below 3 percent, unless authorities stop fiscal adjustment.

Rompres