Romania officially entered recession, following the figures published by the National Statistics Institute that show a decrease of the GDP for two consecutive quarters.

According to the NSI, the economy contracted by 0.2% in Q4 2011 and by 0.1% in Q1 2012.

Despite the slight decrease of the GDP, the Central Bank and the Finance Ministry assures that Romania is not sinking in recession and growth will resume as of the second half of 2012.

The early estimates made by the Prognosis Commission point to an economic growth of 1.7% at the end of 2012, the GDP being estimated at some EUR 609.6 billion.

Recently the International Monetary Fund revised downward the initial economic growth forecasts, from 1.8% to 1.5%.

Mr Jeffrey Francks, IMF's representative for Romania, said that "Our take on the Romanian economy didn't change in the past three months. We are expecting a positive growth in 2012, of 1.5% of the GDP and even more in 2013, 1.5% is not much but it is significantly above the European average, as the euro zone is currently in recession. Under these circumstances, it is an acceptable achievement."

Meanwhile, the national currency, the ROL continues to sink, reaching a new record low against the common European currency, ROL 4.44 per EUR 1. Compared to other currencies in the region, the ROL had a rather stable evolution. The ROL lost 2.8% against the euro since the end of 2011.

However, the formal entry in recession might add more pressure on the national currency, with analysts forecasting an exchange rate of ROL 4.5 per EUR 1 in H2 2012.

According to analysts, the depreciation trend is a consequence of the instability in Greece and also of the deterioration of the fiscal positions caused by austerity in the whole of Europe.

Source - Romanian Times

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