Recession in Romania is most probably U-shaped, declared Franks, who sees a turnaround by the end of this year or the beginning of the next.

As for the likelihood of a drought in 2009 and its effects on agriculture, Franks thinks the social impact is more important than the impact on the GDP.

Governor of National Bank of Romania Mugur Isarescu said yesterday Romania’s economy would still return positive despite the 6.4 percent plunge in the gross domestic product for the first three months.

“I stick to the idea of an economic growth, not the same as in 2008, but rather under certain normality,” said Isarescu.

Romania reached the bottom of the V-shaped financial crisis in the first quarter and an 8-9 percent correction of the current account deficit is enough for this year, as a too sharp intervention could leave deep imprints on the economy, declared Isarescu.

He added that the adjustment of external deficit, which was “absolutely necessary”, generated a better response from the economy than NBR had expected, but a complete avoidance of a slow down was impossible.

The BNR governor said he expected the economy to perform better in the second quarter this year than Q2 2008.

Pressure on the exchange rate and the country risk cost will reduce following the agreement signed by foreign banking groups to keep the exposure in Romania and to provide additional capital to their subsidiaries, declared Franks.

Within two days the IMF will publish the letter of intent inked by the Romanian authorities for the external financing package, added Franks.

The national economy contracted by 6.4 percent year-on-year in the first quarter of the year in real terms, according to the preliminary data published in mid May by the National Statistics Body INS.