Tuesday, January 31, 2012

Bloomberg: Romanian GDP Probably Grew 2.5% in 2011, Exceeding Forecasts

Romania’s economy probably expanded at a faster pace than the International Monetary Fund’s estimates for 2011 after growing in the fourth quarter, said Jeffrey Franks, the fund’s mission chief to the country.

Gross domestic product probably grew about 2.5 percent in 2011, surpassing the Washington-based lender’s forecast of 1.5 percent, Franks said in a televised speech from Bucharest today. The fund expects output to continue to grow this year and next, Franks said, without giving estimates.

“We estimate economic growth at about 2.5 percent last year, so more than we had forecast, which is certainly good news,” Franks said during a meeting with Romanian trade unions in Bucharest. “The bad news is that we’re going to face very strong challenges which might be impeding the recovery of growth over the coming period.”

Romania, which exited a two-year recession in 2011, saw economic growth accelerating to the fastest in three years in the third quarter, sparked by a bumper harvest and a recovery in domestic consumption. The country suffered its worst contraction on record from 2009 until 2011.
Pension, Wage Increases

Prime Minister Emil Boc has been mandated by the ruling governing coalition to hold talks with the IMF and the European Union over pension and wages increases from April, Liberal Democrat Vice-President Gheorghe Flutur told reporters in Bucharest today.

A joint IMF and EU mission is currently in Bucharest to conduct a two-week review of the country’s progress under a 5 billion-euro ($6.5 billion) precautionary loan.

Export-driven growth will probably slow in 2012 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, Franks said on Nov. 7.

The IMF may lower its estimate for Romania this year to as low as 1 percent, Ziarul Financiarreported today, citing unidentified people. The economy may expand between 1 percent and 1.5 percent in 2012, slower than a previous forecast of 1.8 percent to 2.3 percent, the newspaper said.

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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