The bank’s previous forecasts for GDP growth were 2% in 2011 and 3.9% in 2012, according to BCR chief-economist Lucian Anghel. Romanian authorities and the IMF expect the economy to grow by 1.5% this year and by 3.5-4% in 2012.
The authorities will meet with the IMF and the EU at the end of September to determine whether the estimate of 1.5% is still attainable, Finance Minister Gheorghe Ialomitianu said recently.
“The risk of contagion is significant for Romania and negative effects can be transmitted through export demand and capital inflows,” said Anghel in a press release. He added that, if the Government succeeds in pushing infrastructure projects this year and the non-residential sector keeps to its recent trend, construction may be able to remain flat this year.
“As inflation fell in July and the VAT hike’s effects vanished, the chance of retail making a comeback is growing. A clearer upward trend could be seen in the fourth quarter, owing to a more apparent favorable base effect. This will not be enough to make retail positive for the entire 2011,” said Anghel.
He does not rule out the possibility of fiscal slippage in the 2012 election year, but the IMF’s presence in Romania may guarantee that the deviation from the budget deficit target for next year will be reasonable.