IMF Cuts Projection for Romania’s 2009 GDP Growth to 3.5% from 4.8% - Media

“Since the October forecasts, the international financial turmoil has intensified and resulted in a further deceleration of real economic growth,” Mediafax quoted IMF regional representative for Bulgaria and Romania, Juan Jose Fernandez-Ansola, as saying.

Investments and domestic demand have been negatively influenced as Romanian banks meet difficulties in getting financing from abroad due to the higher funding costs and reduced exposure limits, he said.

“Furthermore, a severe slowdown in export markets, mainly in the EU, will affect Romanian exporters, although certain types of more price sensitive goods may be less affected,” Ansola said.

The European Union, which Romania joined in January last year, was the country's main trade partner in the first nine months of this year, accounting for approximately 70% of the country's total imports and exports, country’s statistics institute has said.

However, IMF maintains its forecast for Romania's gross domestic product (GDP) growth for this year at 8.6%, on a good harvest.

“But consumer confidence is already affected, as evidenced by the drop in car sales, although several factors are at play,” Ansola said. “Thus, we see continued strong growth in the third quarter, but a slowdown in the fourth quarter and certainly in the fist quarter of 2009,” Ansola said.

“Obviously, much will depend on the policy reactions in industrialised countries - both regarding bank funding and exports - as well as Romania's ability to utilise this one time opportunity of EU funding to develop its lacking infrastructure,” he added.

Global ratings agency Moody's on Monday said that Romania's GDP may shrink by 0.3% next year due to the effects of the global crisis, local media reported.

For this year, Romania's National Prognoses Commission, the government's team of economic advisers, set its projection for economic growth at 9.1% in real terms.