2008 GDP increase raises this year’s budget deficit

Considering results registered in Q4 2008, GDP surged 7.1 percent year-on-year in 2008. In monetary terms, the economy totaled RON 504 bln (some €117 bln).
A 2008 GDP below initial forecasts, considering that this year’s GDP growth rate is computed based on 2008 data, means that 2009 GDP will be lower than official estimates. If expenditures remain constant and revenues decline, the budget deficit will widen. Thus, the deficit could widen to 2.6 percent, compared to the current two percent target.

According to Ionut Popescu, Advisor to Prime Minister Emil Boc, the government should cut budget expenditure to reach the set deficit target. „Personnel expenses could be further reduced. We should not cut investments,“ Popescu told Business Standard. Data in the final quarter was rather pessimistic for some players in the business environment. Thus, Q4 was much weaker compared to the first nine months of 2008. „Last year’s first three quarters went very well, compared to the fourth quarter,“ Ilie Carabulea, owner of Atlassib passenger transport company, told Business Standard.