“April sentiment indicators for the Eurozone, Romania’s main trading partner, with in more than 50% of total exports, came in disappointingly low, hinting at recession spilling over into the second quarter of this year,” Erste said in a short note Tuesday.
The Romanian economy slid back into recession after declining for the second consecutive quarter. The country’s gross domestic product inched down 0.1% on the quarter in January through March. A quarter earlier, the economy shrank 0.2%.
Erste maintained its growth forecast on the Romanian economy unchanged at 1.2% in 2012, but warned the growth risks “are mostly biased to the downside.”
“Europe remains under the spell of uncertainty that has reached a fever pitch lately. This may fray investors’ nerves, with a negative impact on foreign direct investment inflows into Romania,” the Austrian lender said.