“We cannot ensure that everyone is in unison. Some are pessimistic, others are objective. I would say that Moody’s has a deficient understanding of Romania’s economic realities. I feel it is much more realistic and objective to refer to the forecast by the European Commission, which estimates that Romania’s GDP will amount to 4.9 percent next year,” said Tariceanu during a press conference.
Moody’s agency representatives told The Money Channel that the estimate is based on the international liquidity crisis, which was much harsher than expected. “Romania is an importer of foreign capital and, as such, this global liquidity crisis and the slowing in the euro zone will weigh quite heavily on Romania’s economy,” added Moody’s.
According to the rating agency, the economic decline will lead to a drop in budget revenue, which will force the future government to abandon promises of salary growth announced prior to parliamentary elections. The agency further expects that the budget deficit will rise to 4.9 percent of GDP, due to higher taxation. A drop in consumption will also have some benefits, such as a decline in inflation at the end of 2009, to 4.5 percent from 7.4 percent in October 2008, and a slowing of the foreign deficit to 8.2 percent of GDP compared to 14 percent at present. The current account deficit will be subject to powerful evolution. One of the main engines of imports has been domestic consumption and investments, most of which were financed by loans.
