Fitch: Romanian economy to drop by 1 pc in 2010

Fitch anticipates the Romanian economy will drop by 1 per cent this year and is not expecting a "significant" improvement in the country's rating, Richard Hunter, Fitch director for Europe, the Middle East, Africa and Asia Pacific, stated. According to Mediafax, he pointed out that this prognosis is "very conservative" and the agency is trying not to talk about the worst possible scenario.

At the same time Hunter pointed out that the outlook of Romania's rating has been upgraded from "negative" to "stable," with this fact being more important than the level of the actual rating in the context in which many entities still have a negative outlook. "I understand from our analysts that the Government is working well within the stand-by agreement and the overall developments are in line with the program," the Fitch representative stated. He pointed out that that the agency's officials are not expecting significant improvements in Romania's rating but modifying the outlook to "stable" represents a significant step in itself.

In February Fitch upgraded the outlook of Romania's rating from "negative" to "stable" and gave the foreign currency denominated long-term debt a BB+ rating, and the RON-denominated long-term debt a BBB- rating. On the other hand, Hunter pointed out that the fears concerning a double dip recession in the Euro Zone have significantly intensified.

"We underline that a double dip recession in the Euro Zone does not represent our main scenario. (...) This possibility is becoming increasingly plausible," the Fitch representative stated. He pointed out that Central and Eastern Europe will be affected if the double dip recession scenario becomes a reality.

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