Romania’s economic growth below CEE average in 2008

Financing the external deficit and a rapid increase in bank loans are the main challenges that Romania is facing, leading Unicredit analysts to forecast lower growth for Romania, compared to the 2007 estimates of 5.7 percent. Furthermore, data provided by the “Regional Outlook” are significantly below the growth forecast by Romanian authorities of 6.1 percent in 2007 and 6.5 percent in 2008.

The Unicredit study also provides more pessimistic estimates for other economic indicators. Thus, inflation could amount to 5.8 percent in 2008, and to 4 percent in 2009, while Romania’s inflation target for this year is 3.8 percent +/–1 percentage point. The current account deficit could amount to 14.8 percent of gross domestic product (GDP) in 2008, and to 14.5 percent in 2009, while foreign direct investments are expected to reach €4.8 billion this year, according to the study.

Furthermore, the budget deficit could climb to 2.9 percent of GDP in 2008.
In Central and Eastern Europe, average growth is estimated at 5.7 percent, below the expected level for 2007, of 6.8 percent.