Wednesday, June 8, 2011

Romania Economy Grew 1.7% in First Quarter as Recovery Continues

Romania’s economy expanded more than initially reported in the first quarter on surging exports boosted by demand from western Europe.

Gross domestic product rose 1.7 percent, the first annual growth in two years, compared with a 0.6 percent decline in the fourth quarter, theNational Statistics Institute in Bucharest said today in an e-mailed statement. The figure was revised from a preliminary estimate of 1.6 percent on May 13. GDP advanced 0.7 percent from the previous three months, the second quarterly expansion in a row, revised the 0.6 percent flash estimate.

Romania, which has taken two international loans from the International Monetary Fund and the European Union since 2009, will probably see economic output grow 1.5 percent in 2011, helped by western European demand for the country’s manufacturing products, including Dacia SA cars, according to government and IMF forecasts.

“Industry was the sector that posted the biggest growth rate of 10.1 percent in the quarter, while an improvement of net exports had a positive effect on GDP,” the institute said in the statement. “Internal demand dropped an annual 0.5 percent in the first quarter because of a 3 percent decline in total final consumption and lower government spending.”

The Balkan nation took a 5 billion-euro ($7.3 billion) precautionary loan from the IMF this year as it seeks to reassure investors it will maintain fiscal discipline ahead of elections in 2012. The government has raised taxes and cut public wages and benefits to narrow the budget deficit to within IMF-agreed targets.

Romanian industrial output growth slowed for the second time in six months in April because of low domestic demand, posting an annual increase of 6.3 percent after 7.4 percent in March, the statistics institute said in a separate e-mailed statement today. Output fell 0.2 percent on the month.

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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