The negative impact of agricultural results brought only a 5.6 percent economic growth for Q2, but analysts estimate increased negative influence in Q3. “The poor performance in agriculture and net exports will produce an economic growth of only 4.6 - 4.8 percent in Q3. This means that GDP advancement for 2007 would amount to just 5.6 percent,” ABN Amro’s Chief Analyst, Radu Craciun, told Business Standard.
Furthermore, the National Prognosis Commission (CNP) reviewed its estimations for 2007 macroeconomic indicators, GDP growth dropping by 0.4 percent, to 6.1 percent. “Economic growth had a downward revision to 6.1 percent, compared to the authorities’ spring forecast of 6.5 percent, due to acute drought. There are chances to maintain a 6 percent growth if no further disturbing phenomena occur,” CNP President, Ion Ghizdeanu, told Business Standard.
This would imply that GDP growth for H2 would be 6.4 percent, which is improbable. According to a Raiffeisen study, economic upturn forecast in Q3 and Q4 will be under 5 percent, which would make Romanian policymakers unwilling to strengthen economic policy. The main risk, according to Raiffeisen analysts, at least for now, is the lack of commitment from Romanian authorities to promote restrictive policies, especially since 2008 is an electoral year.
Drought effects will influence autumn production, especially for technical plants and corn, says Ghizdeanu. This would impact on the industrial gross added value, up to 10 percent, compared to the current 5 percent.
