Friday, May 22, 2009

Romania’s Economy May Be Recovering, Isarescu Says

By Irina Savu and Adam Brown

May 21 (Bloomberg) -- Romania’s economy may be recovering after a contraction in the first quarter and may post full-year growth, central bank Governor Mugur Isarescu said.

“I hope the economy will recover in the second quarter and we will have growth for the whole year,” Isarescu told journalists on the sidelines of a seminar in Bucharest today. “The worst has passed in the quarter. We’re not going to have rapid growth and we don’t need such rapid growth.”

The economy shrank an annual 6.4 percent in the first quarter as a slowdown in lending and wage growth eased consumption, the statistics office said last week. Romania was granted a 20 billion-euro ($27 billion) International Monetary Fund-led loan last month to help stimulate the economy, bolster the currency and finance the current account and budget deficits.

Isarescu also said today the current account gap will narrow at a slower pace through the rest of the year after it narrowed sharply in the first quarter.

“The crisis accelerated the adjustment of the current account deficit,” he said. “The hardest period of the adjustment was between last November and this March, which is now over. What we need now is sustainable economic growth without a worsening of the deficit.”

The current-account gap narrowed in the first quarter to 709 million euros from 3.96 billion euros a year earlier, the Bucharest-based Banca Nationala a Romaniei said on May 15.

To contact the reporter on this story: Adam Brown in Bucharest

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