Monday, March 16, 2009

Romania output slumps again, some hope in monthly rise

BUCHAREST, Mar 16 (Reuters) - Romania's industrial output fell 12.1 percent on the year in January as the global crisis battered manufacturing, though better than expected monthly figures signalled some stabilisation of production.

Statistical data released on Monday showed output rose 0.9 percent on the month in January, compared to December's plunge of 19.2 percent.

Tumbling demand from the euro zone has hurt central and eastern European economies in recent months, forcing many manufacturers to halt production temporarily and lay off workers.

But analysts said the data showed the sector may have already absorbed the worst of the adjustment and that sharp falls may ease off.

'It is a positive surprise,' said Ionut Dumitru, head of research at Raiffeisen Bank in Bucharest.

'The biggest shock was in November through January, but things should improve from February. We will still have negative industrial output, but things are beginning to settle down.'

Romania has switched from being the European Union's fastest-rising economy to one of its most vulnerable in just a few months, as its dependence on evaporating foreign cash exposes it to a potential financing crisis.

Earlier this month, it became the bloc's third member state to seek EU and IMF aid due to a lack of foreign financing that has crippled growth and raised the risk of default across the bloc's easter wing.

Economists said any deal in response to Romania's request would calm fears of an immediate meltdown and could help markets in the short-term.

However, many still say recession is possible in the country of 22 million people living on the coast of the Black Sea.

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