In the previous report, the bank expected the country’s economy to contract by 6.4% in 2009 and by 2.5% in 2010. Romania’s Gross Domestic Product fell 6.2% in first quarter 2009 YoY.

The minister of finance, Gheorghe Pogea said recently Romania had experienced a sharper-than-expected economic contraction in second quarter that exceeded Q1 2009 numbers.

IMF has considerably revised its GDP growth estimates for Romania, from -4.1% to -8/-8.5%.

The National Institute of Statistics will make public the data on the country’s second-quarter economic performance.

As for the fiscal gap, it is expected to stay in the range of 7.2% of Gross Domestic Product in 2009 and around 6.3% in 2010.

According to Merrill Lynch, the National Bank of Romania is likely to reduce the monetary policy rate to 7.5% this year, from 8% as they had previously estimated. For 2010, the bank forecasts a contraction of 5.5%.

The board of National Bank of Romania has decided in its rate-setting session on August 4 to cut the monetary policy rate from 9% to 8.5% in line with analysts’ expectations but surprised the market by reducing the required reserve ratio for fx-denominated liabilities to 30%.