One year of recession and the future remains uncertain

A 7.6 percent economic decline in the first six months, a budget deficit fixed at 7.3 percent of gross domestic product (GDP), a 6.3 percent unemployment rate at the end of July, the latter reported by the National Employment Agency (ANOFM). Official data has outdone all pessimistic estimates: the economy's condition is bad, albeit better than expected. According to the agreement with the International Monetary Fund (IMF), the government expects an annual economic decline of 8.5 percent, a forecast more optimistic than that forwarded by analysts.

The economy declined 8.8 percent in the second quarter of 2009 compared to the corresponding period in 2008 and by 1.2 percent compared to the previous quarter, according to data provided by the National Institute of Statistics (INS). Moreover, Romania's economy fell 7.6 percent in the first six months. Practically speaking, this means four quarters of economic decline, or one year of recession in Romania. Analysts said that the Romanian economy will bounce back when European markets rebound. And this seems to have begun in the second quarter of this year. "In the end, the evolution of the corporate sector depends greatly on foreign markets. The profits of companies will continue to slide, but at a lower rate for enterprises connected to foreign markets, to exports. On the other hand, I do not see a rebound of companies linked to the internal market, except those producing and selling crisis or niche products," the President of the Association of Romanian Businesspeople (AOAR), Florin Pogonaru, said.

The Statistical Office of the European Communities (Eurostat) published a report regarding the evolution of European economies in the second quarter of 2009. This report indicates that our country ranked fourth in the European Union in terms of the drop rate of GDP, following Lithuania, Latvia, and Estonia.

Analysts interviewed by Business Standard estimated an 8.5-10 percent year-on-year economic decline for the second quarter of 2009. They added that Q2 or Q3 will mark the minimum level of the economic drop. On the other hand, the IMF Mission Chief in Romania, Jeffrey Franks, said Monday that the economy contracted by some 10 percent in Q2 2009, but the lowest level will be reached in this year's final quarter or in the first three months of 2010.

standard.money.ro