The main trigger of inflation was the exchange rate. A more expensive European currency makes traders pay more to acquire the foreign currency they need in commercial transactions.
Economists say that the first half of 2009 will be strongly influenced by the exchange rate, but the second part will be marked by a decline in domestic demand. “In this year’s first half, the leu could continue its downward trend, and this will generate inflation. In the second half, if consumption drops, prices will back down,” the Chief Economist of Banca Comerciala Romana, Ionut Dumitru, told Business Standard.
The agricultural production is another question mark for the rest of 2009. Specialists generally say that a good agricultural year is followed by a poorer one. Last year was rather good for agriculture. If this year’s production is good, Romania will not have to import foodstuffs and inflation will decline.
