The new 2012 growth forecast should therefore be somewhere around 1.3%. On the other hand, the IMF is considering raising its economic growth estimates for 2011 from 1.5% to 2% or 2.5%.
President Traian Basescu yesterday said that if the euro zone went into recession in the second part of the year as some analysts expected, Romania would find itself in a difficult position and its economic growth would be slowed down. The 2012 growth estimates, around 1.5% are considering precisely a potential recession (in the euro zone i.e.), he said. The President estimates 2011 growth to have reached 2.5%.
The World Bank and the European Bank for Reconstruction and Development have already adjusted their 2012 growth forecast to 1.5% and 0.8%.
The talks of the Romanian authorities with the IMF and European Commission representatives should materialize in a series of answers to Romania’s problems, the most important of which is stimulating economic growth and preventing the country from sliding back into recession.
Consolidating economic growth is actually the main reason of the new precautionary arrangement with the IMF and the European Commission signed last year.
It remains to be seen what solutions international experts who arrived in Bucharest on January 25 to stay until February 4, will find to stimulate economic growth.
“An approximately 1.5% economic growth is still optimistic given the situation in Europe now, with an unavoidable slowdown of foreign demand, an unfavorable base effect in agriculture and pressure in terms of financing because of the capital requirements,” says Ionut Dumitru, chief-economist of Raiffeisen Bank, which adjusted its gross domestic product growth forecast for 2012 from 2% to 0.5%.
“I find it hard to believe that we could have attained even over 1% growth. It is very much up to the developments abroad.”
Adjusting forecasts upsets the budget and revenue projections once again, as a lower economic growth comes with lower revenue for budget.
An as accurate as possible GDP forecast is essential for building the yearly budget but experience shows the authorities have relied on ungrounded expectations in the past few years, which were quickly proven wrong by reality so that brutal steps like the VAT hike or wage cuts were needed. International financial institutions, too, have adjusted their forecasts as they went, which have been far off the mark at times.
(English version by Loredana Fratila-Cristescu)