Romania
Highlights and Key Issues Romania’s industrial sector continued to
The main driver of growth remains exports,
recover steadily in the final months of 2010 and is expected to keep strengthening this year. In particular, production expectations rose to their highest level in more than two years in January, while rising capacity utilisation could finally break the downward trend in investment, at least in the industrial sector. Although unemployment has declined over
the last year, the trend is partly explained by a shrinking labour force. Consumer confidence remains low and spending continues to weaken as a result of the fiscal squeeze (including pay cuts and lower welfare expenditure).
which in December were up over 30% on the year in euro terms. But this leaves Romania vulnerable if EU demand were to weaken. Despite slowing to 7% in January, CPI
inflation is being kept high by rising oil and food prices and the impact of the VAT hike in July. But with no sign of second-round inflation effects, the central bank kept its key rate at 6.25% in February. Although GDP growth is likely to be positive
for 2011 as a whole, albeit only marginally so, continued strong fiscal consolidation will remain fundamental for lasting recovery. We expect the budget deficit to shrink to 4.7% of GDP in 2011 from 6.6% in 2010.
Forecast for Romania (Annual percentage changes unless specified) Domestic Demand Private Consumption Fixed Investment Stockbuilding (% of GDP) Government Consumption Exports of Goods and Services Imports of Goods and Services GDP Industrial Production Consumer Prices Current Balance (% of GDP) Government Budget (% of GDP) Short-Term Interest Rates (%) Long-Term Interest Rates (%) Exchange Rate (LC per US$) Exchange Rate (LC per Euro)
2008
2009
2010
2011
2012
2013
6.4 8.7 18.3 3.1 6.6 7.1 5.5 7.4 2.4 7.9 -11.6 -4.8 9.5 7.7 2.52 3.68
-15.7 -9.4 -22.3 -3.0 1.3 -4.9 -20.2 -6.9 -6.0 5.6 -4.2 -7.4 9.3 9.7 3.05 4.24
-1.5 -1.8 -14.7 1.3 -2.7 17.3 11.1 -2.1 4.1 6.1 -4.3 -6.6 6.7 7.3 3.18 4.21
-2.3 -0.4 -4.9 0.1 -1.2 7.0 1.0 0.1 5.2 5.1 -2.3 -4.7 5.9 7.2 3.25 4.36
4.0 4.7 4.9 -0.5 1.6 7.0 5.2 4.8 5.4 3.2 -2.6 -4.0 4.8 6.9 3.47 4.45
6.6 6.2 8.5 -0.2 3.2 6.5 7.4 5.9 6.5 3.2 -3.3 -3.8 4.5 7.0 3.59 4.50
For further information contact Fabio Ortolani (fortolani@oxfordeconomics.com)
Country Economic Forecast: 15 February 2011