Romania will face an imminent economic crisis that triggered its first alarm signals in late 2008. Wall-Street compiled the most important queries for 2009 that the economy and local business landscape is heavily dependent upon.

When will be the peak of the crisis?

The global economic environment will experience its worst job cut since the Great Depression. Companies in Romania said they would sharply cut workforce and squeeze production output, while 2008 investment programs were aborted, on sagging demand and deepening economic crisis.

Economist Nouriel Roubini, who signaled in 2007 that a global financial crisis would strike soon, wrote a commentary for Bloomberg, estimating that “the U.S. will certainly experience its worst recession in decades, a deep and protracted contraction lasting at least through the end of 2009”.

UK economy will also shrink by 2.9% in 2009, marking the entrance in its worst crisis since 1946.

For 2009, Romanian cabinet will face an imminent crisis, and its first signs were visible since late 2008, according to an analysis made public by Oxford Analytica.

Romania is experiencing its first economic crisis since the fall of communism, its performance in 2008 combined with a record economic growth of 9.1% in first nine months being backed down by the global financial crisis, reads Oxford Analytica research.

BNR governor, Mugur Isarescu said domestic economy would likely grow by 5-6% margin in 2006, if investments would be directed to blocked fields, such as infrastructure and agriculture.

Insiders cannot accurately predict the peak of financial crisis, in the domestic market.

Optimistics see the peak of the crisis in this summer, whereas the realistic estimations find that is still a long way to go until the end of the tunnel and probably, there is still more “cleaning to do in the global financial mess”.

“The duration of the crisis is conditioned by the loosening of interbank rates in the following weeks, and the decline of LIBOR rate. If none of these terms is fulfilled, there will be a recession in 2009, and if not, we will have to face tougher conditions”, said Cristian Ionescu, Country Manager of Coface in Romania.

When will consumers regain confidence in financial institutions?

As long as credit bubble spread to all strong financial centers across the world, the confidence between financial institutions faded out, the banks not being informed on the competitor’s status and fearing of not getting back the money they lent.

Hence, a new financial deadlock unfolded and hit Romanian lenders as well.

Budget 2009

The Romanian cabinet will experience a difficult year, as the state incomes might decrease on drastic slowdown of economic growth.

The budgetary and fiscal strategy, as well as macroeconomic policies for 2009 and for medium term will be based on detailed analysis of the country’s economic and financial status, which will be completed in early January.

When will Bucharest Stock Exchange recover?

No expert can say exactly when the capital market will hit the bottom level or when it will follow an upward trend. Some experts say the Bucharest stock market will recover in the second part of next year, even if the market will be “very fragile” in 2009.

Large economies will plunge into recession; we have learned in 2008 that liquidity has been a collateral damage of financial crisis, due to withdrawal of foreign active investors from the stock market, which led to a collapse of quotations.

When will lending conditions loosen?

Lending conditions will be modified in January 2009, according to a recent statement of BNR’s first vice-governor, whereas lenders are not “very optimistic” about the decisions that central bank will make regarding the new lending regulations.

Experts say the new market conditions call for a review of regulation in an effort to unclog lending activity which fell sharply in November, after the negative trend in October.

The annual growth rate of non-government loan fell to 38.3% in November, from 44.8% a month earlier, and 50.5% in September.

When will the real estate market start running?

Domestic real estate industry had a right-foot year start but a left-foot yearend. The effects of the crisis had a strong impact on local residential industry.

Real estate market will probably take a normal path only when the banks would reset their lending conditions.

In the context of a review of prices compared to prior years, things might settle down starting with the second half of 2009, insiders say. The main factors that could unclog the real estate markets are lighter lending conditions, a lineup to real purchase possibilities of population, as well as messages broadcasted by the media.

How far will the depreciation of the national currency go?

The currency exchange rate depends on the collaboration between the new executive cabinet and central bank, on the access to European funds, and on how will the international context evolve.

The currency exchange rate might hit 4.2 lei/euro threshold in first quarter 2009, analysts say. The fall of the national currency cannot be avoided without a toughened budget policy, NewsIn informs.

National currency dropped by 10.3% in 2008, down to 3.6827 lei/euro average, from 3.3373 lei/euro average in 2007.

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Despre autor este un cotidian de business fondat în 2005, parte a grupului InternetCorp, unul dintre cei mai mari jucători din industria românească de publishing online. Pe parcursul celor peste 15 ani de prezență pe piața media, ne-am propus să fim o sursă de inspirație pentru mediul de business, dar și un canal de educație pentru pentru celelalte categorii de public interesate de zona economico-financiară. În plus, are o experiență de 10 ani în organizarea de evenimente B2B, timp în care a susținut peste 100 de conferințe pe domenii precum Ecommerce, banking, retail, pharma&sănătate sau imobiliare. Astfel, am reușit să avem o acoperire completă - online și offline - pentru tot ce înseamnă business-ul de calitate.

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