Thursday, May 6, 2010

Romania expects moderate economic growth in 2010

Romania's economic growth was expected to recover moderately to 0.8 percent growth this year and gradually accelerate to 3.5 percent in 2011, the European Commission said Wednesday.

After negative growth of 7.1 percent in 2009, Romania's economy was expected to see growth slightly below the EU average of one percent this year, the European Commission said in its spring economic forecast.

The expected improvement in economic conditions in Romania was due to a gradual recovery of external demand and foreign direct investment, the commission said.

The commission's forecast of 3.5-percent growth of Romania's economy in 2011 was significantly higher than the 1.7 percent projected for the European Union's 27 member countries, and the 1.5 percent of the euro zone.

The commission also revised its inflation forecast for Romania to 4.3 percent this year from the previous 3.5 percent, as it expected higher excise duties on tobacco and oil to increase inflationary pressure.

This estimated inflation rate was more than twice the projected average of 1.8 percent of the EU's 27 member countries and almost three times higher than the 1.5 percent rate in the euro zone, the commission added.

Next year, that indicator was supposed to fall to 3 percent in Romania and 1.7 percent in both the EU and the euro zone.

The sluggish domestic demand could help ease inflation in 2010, the commission said. On the other hand, the same anemic consumption is one of the main factors that hinder economic revival.

The unemployment rate in Romania will be 8.5 percent this year, below the 9.8 percent expected for the EU and 10.3 percent in the euro zone, the commission said.

The unemployment rate is estimated to drop to 7.9 percent in Romania in 2011, while in the EU, the indicator will be 9.7 percent and 10.4 percent in the euro zone, respectively.

With an average annual economic growth of 6.8 percent between 2004 and 2008, Romania was one of the fastest growing European countries. But the country's economy was hit hard by the international financial crisis, which caused a 7.1 percent fall last year.

Source: Xinhua

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