BCR Bank Sees Romania’s Economy Shrinking 8.0% in 2009, Turning Around No Earlier Than H2 2010

Romania's gross domestic product (GDP) shrank by an annual 8.8% in the second quarter of 2009 and was down 7.6% on the year in the first half of the year. Second-quarter GDP fell by 1.2% from the first quarter.

“[…] given the worsening macro environment and a further plunge in domestic demand, we have changed our GDP economic contraction forecast to -8% in 2009, maintaining the outlook for 2010, with economic growth of slightly above zero,” BCR said in its report.

Romania's Finance Minister Gheorghe Pogea has said on a number of occasions he expects the economy to shrink by between 8.0% and 8.5% this year, after expanding by a real 7.1% in 2008.

“Romania could return to positive annual economic growth rates by the second half of 2010, at the earliest. As the U.S. and the eurozone emerge from the recession, a prerequisite for the revival of the Romanian economy, we might see a slow and gradual improvement of the performance over the next few years,” the report said.

BCR analysts also said it is more likely that the Romanian currency will remain stable, at least until the presidential elections due in late November 2009.

In late March Romania reached an agreement with the IMF, the European Union and the World Bank on a 20 billion euro ($28.6 billion) loan package aiming to support its crisis-hit economy.

($=0.6981 euro)