This is the first time that a high official of the central bank says the BNR has not predicted the depth of the recession.
It remains to be seen if the 2012 forecasts of economic growth for Romania will be met in an uncertain international context, with recession anticipated for the eurozone.
Comforting speeches and upbeat expectations come from the Government and the central bank.
“It was very difficult for us to ‘read’ in December 2008 that the economy would go from +8% to -7%. We didn’t see that coming, we have to admit. We were lucky, though, that the forecasts we made with the IMF and the Commission- which pointed to a -10% decline, were not met,” Cristian Popa, deputy governor of the BNR, in charge of monetary policy, said recently.
If the 2009 budget had been built on a more conservative basis, on a GDP decline, the measures to restructure the public sector and the initiatives to stimulate the economy would have been taken earlier. And perhaps a deepening of the crisis in 2010 could have been avoided, and the economy would have been in a better position now.
So what good was the so-called anti-crisis plan adopted by the Romanian Government in 2009? A tough verdict was given by The European Bank for Reconstruction and Development (EBRD), one of the participants in the EUR20 billion financial package taken out by Romania in the spring of 2009: “The incentives for the economy were more imaginary than real; few projects were started, and their effect on the economy was negligible.” It is also the EBRD who said that in fact the value of the financing taken out in 2009 – the “safety net” – reflected the “gravity of the economic situation and the country’s needs.”
Many of the measures meant to counter the crisis floated in 2009 remained on paper, and the restructuring of the public sector did not advance, either.
The 2010 budget was in turn based on economic growth and since it did not come, the Government had to cut public sector wages by 25% and boost VAT from 19% to 25%.
And Romania experienced another year of recession.
The Romanian authorities cited several times the failure of IMF forecasts to justify that their own predictions were proven wrong by reality, and did not abandon a dominantly optimistic rhetoric.
But the experience of 2009 and 2010 showed the limitations of forecasting models used by the international financial institutions, and by the BNR and banking analysts, questioning their ability to anticipate economic trends during crisis times.
In fact, the EBRD has noted the striking difference of 13 percentage points between the initial forecast of the IMF, which expected economic growth of 4.5% in Romania in 2009, and then in October 2009 estimated an 8.5% decline.
There was also a big difference between the forecasts of the EBRD, from 3% growth to 8% decline.
Forecasts made by several commercial banks for Romania’s economic growth this year hover around 0.5%, but those of the European Commission and the IMF are much more optimistic – 1.6% and 1.5-2% respectively.
The Romanian economy managed last year to record a 2.5% growth, after two years of contraction. However, the contraction in the fourth quarter of 2011, which occurred earlier than analysts had predicted, is of concern, announcing a return of recession, with a GDP decline also expected for the first quarter of 2012.
(English version by Daniela Stoican)