EBRD Ups Romania GDP Forecast To -2% In 2010

In its latest economic outlook, the EBRD said Romania has managed to remain „on course” with its EUR20 billion IMF-led program by implementing austerity measures that will keep the fiscal accounts under control.

„However, the Romanian economy seems certain to decline again overall this year before returning to modest growth next year,” it said.

For 2011, EBRD revised its growth forecast on Romania to 0.9%, compared to zero growth previously.

The bank said the southeast Europe continues to lag behind other regions in terms of the pace of recovery from the crisis, with the exception of Turkey, where growth is now proceeding at a rapid pace.

„The one bright spot is the external sector, where exports in most countries are growing rapidly reflecting both a base effect from the deep slump in 2009 and renewed global demand for key exports from the region,” the report noted.

However, domestic demand remains subdued and consumer and investor confidence stays low, EBRD said, adding that most of the countries in the region still face fiscal challenges.

„Countries with IMF programs (Bosnia and Herzegovina, Romania and Serbia) face great difficulties in adhering to spending reduction commitments agreed under the programs, and those countries without explicit IMF support also struggle to keep a lid on government spending,” it noted.

For 2011, EBRD expects the economy will pick up to 1.6% in the region, up from a growth of 1.2% previously.