“By including the economic growth corresponding to 3Q (higher than our expectations) and by adjusting the 4Q forecast by incorporating the forecast error on agricultural production, we have modified the forecast for the full 2011 to 2.5% (which compares with the previous 1.8%). The forecast for economic growth corresponding to 4Q has also been modified upwards, to 2%,” commented Catalina Molnar, senior economist of RBS Bank.
The National Statistics Institute announced on Tuesday that Romania’s GDP rose 4.4% in the third quarter of this year against the third quarter of last year, and by 1.9% against the second quarter. Both figures far exceeded analysts’ expectations.
This year too, analysts’ forecasts fluctuated quite a lot amid international uncertainties. In spring most 2011 forecasts ranged between growth of 0.5 and 1.5%. Subsequently, after the 2010 economic growth was announced, forecasts were revised on the rise. But around mid-year analysts started to revise their forecasts down amid heightened tensions in the euro zone, and now forecasts have improved again.
Molnar warns that a significant positive contribution from agriculture for this year’s economic growth will most likely translate into an even more significant negative base effect than the one previously estimated for 2012.
“If one also considers the recent downward revision of economic growth in the euro zone for 2012, the 2% economic growth forecast for Romania for 2012 could be a difficult target to achieve. We will most likely revise the forecast for 2012 down.”
RBS Bank Romania cut its 2012 economic growth forecast from 2.8% to 2% in mid-September.
“We will increase our economic growth forecast for this year to over 2%. Now it is 1.4%. We are in the calculation stage now. It depends how much agriculture will contribute and how much industry will slow down. For now there are no strong signals that industry would be slowing down. The new forecast will most likely be upwards of 2.2%,” said Lucian Anghel, chief economist of the BCR, the largest bank by assets.
BRD-SocGen, the second-largest bank on the local market, has for now kept its 2011 economic growth forecast unchanged at 1.5%.
Among the banks who have modified their forecast is Raiffeisen Bank, which changed its 2011 growth projection from 1.5% to 2.5% thanks to the much better than expected third quarter.
“After the data published for 3Q were beyond expectations, we revised our forecast of economic growth for 2011 from 1.7% year-on-year to 2.2-2.4% year-on-year. The main growth engines in 2011 have been industry and agriculture, which saw robust growth, but unfortunately their chances of keeping up their growth rate next year are weak in the absence of major structural reform that would support significant rises in the long term. Other surprises come from the construction sector, retail and services, which appear to have reached an inflection point and will end the year with a slight positive growth,” says in turn Melania Hancila, Volksbank’s chief economist.
For the last quarter of the year, Volksbank has considered GDP growth of 1.4-1.5% year-on-year, anticipating a decline in the growth rate of the economy in the last quarter, amid the deterioration of the situation across the EU.
The National Statistics Institute (INS) will present at the beginning of December the factors that influenced the progression of the GDP in the third quarter, with ING Bank to announce its new forecast then.
“Given our significant forecast error, we have placed our GDP forecasts under review. Revisions should follow after the release of detailed data (December 6). Incorporating the 3Q11 figure in our growth profile suggests activity expanded by about 2.5% and for the moment this seems a fair reference point,” says Vlad Muscalu, ING Bank economist.
(English version by Daniela Stoican)