The Regional Economics Prospects study released by the European Bank for Reconstruction and Development showed that the economic growth in Romania and Bulgaria will be negligible or even negative in 2010.
The three-yearly report targeting the 29 countries acting in the EBRD said that the recovery has begun, but it remains fragile and it will generally be slower that in other emerging markets.
The bank said that the recovery will continue to be sluggish and that the volatility in the Western European markets adds to the risks in the South Eastern European area in particular. It added that "The deep recessions of late 2008 and 2009 continue to have knock on effects in the form of high non performing loans and unemployment, which constrain credit growth and the recovery of domestic demand. Encouragingly, the crisis in Greece has not had significant spillovers to the transition region so far."
The study said that even so, Romania remains one of the region's red flashlights. In Romania and Bulgaria, the fiscal constraints agreed upon up until now will affect the rise in the domestic demand. By contrast, in Croatia and other EU 10 states economic growths of 2.2% in the fourth quarter of 2010 are anticipated.
The growth of the Romanian GDP has been revised downward by the EBRD from 1.3% to zero, with the 2011 prediction standing at 3%, the indicator was minus 7.1% in 2009. The main risk factors taken into account by the study authors are the FX domestic crediting put at 24% in Romania, of which 11.8% is in the corporate sector and 12.2% in the household sector.
Another risk factor is the public debt, with the short term one in Romania being 27.7%. The banking system is solid, with assets totaling 58.7% of GDP, but the foreign banks account for 87.7% of the Romanian banking market.
Even though the EBRD anticipates a zero growth of the Romanian economy this year, a comparison of Q4 of 2010 with Q4 of 2009 indicates a possible growth in this fourth quarter at 2.6% and an annual inflation rate at 3.8%.
(Sourced from www.financiarul.ro)
