Moody’s financial rating agency has upgraded its outlook on Romania’s economic growth to 2.3% from its October forecasts of 1.2% and said it expects a budget gap of 6.3% of GDP, at a narrow margin from previous 6.4%.
“Macroeconomic conditions suggest that the country is crawling out of the recession. In our view, the economy will return to growth in the second half of 2010. Exports have stabilized and cash flow has improved over the past few months, which should drive a slow economic recovery later this year”, Moody’s said in the latest report issued by the rating agency.
However, Moody’s expects the Romanian economy to run at low speed for the next few years, due to a tepid and recovery in most European countries softened by a weak growth in lending.
As for current account deficit, the rating agency predicts 3.5% adjustment of GDP by year-end.
Moody’s graded the country’s governmental strength to “medium”, due to the mix of low public debt burden and fragile fiscal framework. The agency predicts a public debt of 27.4% of GDP at the end of 2010.
“Even though the average earning is much below the euro area average, it grew significantly over the past 10 years, and the stronger institutional, financial and commercial integration in Europe should provide support for long-term real convergence”, the agency added.
Moody’s also predicts an inflation rate of 3.5% for this year.
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