Economic growth slowed down significantly in 2Q of the year against 1Q. This was anticipated by the Government, which reduced its estimate to 0.2%-0.3% growth, while some analysts even forecast a slight decline against the first quarter.
The president of the National Forecasting Commission, Ion Ghizdeanu, said he expected the gross domestic product to grow at least 1% in the second quarter compared to the same quarter of 2010.
“The most important thing is whether part of the good output expected in agriculture is recorded in the second quarter. Even considering the slowdown, we are still targeting growth of 1.5% percent growth for the full 2011.”
The GDP growth slowdown comes amid a slower rise of exports and, implicitly, of the industry, and amid the continued contraction of private-sector consumption. In the first quarter of the year, the economy rose 0.7% compared to the last quarter of 2010.
The Romanian Statistics Institute is set to announce the second-quarter result on Tuesday at 9 AM.
The Government has revised its forecast for the country’s second quarter economic growth to 0.2%-0.3% from a previously expected 0.3%-0.4%, but expects better results in the third quarter thanks to a good agricultural output, according to Mediafax news agency.
Economic growth is set to amount to around 1% year-on-year, a substantial cut on the 1.7% rate recorded in the first quarter, which exceeded analysts’ expectations.
Analysts of ING Bank, who tend to have the most pessimistic forecasts, anticipate that the economy recorded growth of 0.1% in the second quarter compared to the first, with the annual growth rate expected at 1.2%.
Barclays Capital, the investment division of one of the world’s largest banks by assets, believes there are signs in the monthly indicators that economic growth slowed down substantially in the second quarter. At the end of last year, Barclays had one of the most pessimistic forecasts for Romania’s economy, expecting it to grow by just 0.4%, but it improved its estimate in March, anticipating that investments and consumption would stabilize and exports would contribute to positive growth for the whole year.
But now the British analysts believe the conclusion “some” have drawn that the Romanian economy is out of recession could prove premature and that there are considerable downside risks to their projections.
“The incipient recovery between the fourth quarter of 2010 and the first quarter of 2011 was mainly due to stronger external demand as exports surged. In recent months, this trend has reversed, with exports declining. The slowing of exports is starting to affect the trade balance. There is a strong possibility the economic slump in Romania could continue for some time.”
The key problem for exports is demand, with the slowdown of the exports rise being a bad sign for economic growth because exports and stocks have been the main contributors to the growth recorded in the first part of the year, says Dan Bucsa, chief economist of UniCredit Tiriac Bank.
Analysts of American bank Citi in turn expect a slower GDP growth in the second quarter than in the first, and not just for Romania but also for the Czech Republic, Hungary and Slovakia.
BCR, the largest bank on the Romanian market by assets, is slightly more optimistic, expecting economic growth of 0.4% in the second quarter and an annual GDP growth of 1.5%.