Bancpost: Romania Economic Recovery Threatened By High Inflation

Although the disinflation process is slated to gain momentum in 2011, the central bank is unlikely to reach its year-end target, Bucsa said.

„The inflation may ease to below 5% by July, but the probability that the annual rate decelerates to below 4% by year-end is threatened by higher prices of fuels and food on international markets,” he added.

Romanian central bank targets an annual inflation of 3% at the end of December, plus/minus one percentage point variation around the band.

Moreover, the government’s plan to deregulate energy and natural gas prices could further increase inflationary pressures, the Bancpost’s economist said.

Bucsa said Romanian economy should „finally” emerge from recession in 2011, after two years of declines. However, the recovery will be slow, he added.

„Improved consumer confidence and increased lending are key factors in the evolution of the gross domestic product,” Bucsa said.