Tuesday, November 15, 2011

Romania GDP Quickens to 4.4% on Harvest, Exceeding Estimates

Romanian economic growth accelerated in the third quarter to the fastest pace in three years as a bumper harvest compensated for weak domestic demand, raising prospects that this year’s expansion will top estimates.

Gross domestic product rose 4.4 percent from a year earlier, compared with 1.4 percent in the second quarter, the National Statistics Institute in Bucharest said today in an e- mailed flash estimate. The figure exceeded the median estimate of 2.3 percent in a Bloomberg survey of eight economists. Detailed GDP data will be published on Dec. 6. Seasonally adjusted GDP advanced a quarterly 1.9 percent.

Romania, which exited its worst recession earlier this year, will probably see economic output grow 1.5 percent in 2011, helped by demand for the products such as Dacia SA cars, according to government and IMF forecasts. Today’s data matched figures released late yesterday by President Traian Basescu.

“We have growth of 4.4 percent in the third quarter and let’s hope we’ll post 2.5 percent growth in the fourth quarter, which would allow us to have economic growth of more than 2 percent this year,” Basescu told state television TVR1 yesterday. “Growth was driven by construction, agriculture and industry, while consumption is still low.”

GDP was boosted by a 25 percent increase in output in agriculture, a 7.2 percent jump in construction and 5.5 percent increase in industry, Basescu said.
‘Real’ Growth

Agricultural output was probably the main driver as it posted “real double-digit growth,” Banca Comerciala Romana SA economist Eugen Sinca wrote in an e-mail note to clients after the estimate was released.

Growth in the export-driven economy will probably slow next year to between 1.8 percent to 2.3 percent, compared with a previous forecast of 3.5 percent, as Europe’s debt crisis slows growth in Romania’s major trading partners, Jeffrey Franks, the International Monetary Fund’s mission chief to Romania, said on Nov. 7.

“We have put under revision our 2011 economic growth forecast and the new estimate will most likely stay at above 2 percent,” BCR’s Sinca said. “We’ll revise downwards the outlook to below 1.5 percent in 2012 as lower external demand, an ambitious fiscal consolidation program followed by the government and a negative base effect in agriculture will weigh on the next year’s growth prospects.”

The leu was little changed at 4.3643 per euro in Bucharest trading as of 11:32 a.m., while the Bucharest Stock Exchange’s benchmark BET index fell 0.2 percent to 4,519.39.
Rate Cut

Policy makers unexpectedly cut the monetary policy rate by a quarter of a percentage point to a record 6 percent on Nov. 2 to spur a recovery after inflation in September was the slowest in two decades. A day later, the European Central Bank lowered its benchmark interest rate as the debt crisis drags the euro- area economy toward recession.

The GDP figure “was obviously an encouraging reading, placing Romania among the top growers in the European Union in the third quarter,” Simon Quijano-Evans, the London-based head of emerging-market research at ING Groep NV, said in an e-mail. “However, regional focus is now on 2012 being hit by spillover from the major trading partners in the Eurozone.”

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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