Romania's economy sank 2-3.5%, Raiffeisen says

Romania’s economy dropped by 2-3.5% in first quarter 2009 from prior-year period, on deepening economic downturn, Raiffeisen Bank analysts said in a report.
Compared to prior-year quarter, Romania’s economy sank 2-3% in Q1 2009, as RZB analysts estimate, adding that the current economic growth outlook in 2009 of 0.5% will be revised downward.

The report found that the construction sector will have a weak performance in the coming period, with the possibility of the marketplace activity to shrink further, following low confidence indicators and evolution of construction permits.

Analysts expect the market to bounce back in the second half of the year as a result of public investments.

The number of jobless could hike to 600,000 by yearend, from 516,612 at the end of March, report shows. Raiffeisen Bank expects lower inflationary pressures with the leu’s devaluation being the main factor that lifted inflation rates above forecasts.

“We expect the inflationary pressures to temper down in the coming period and lower inflation rates in the next few months”. Raiffeisen Bank analysts project an annual inflation rate of 6% in June.

“The recent appreciation of the local currency which will strengthen in the coming period, reduction of administrated prices and weak consumer demand are the main factors upon which we built our economic projections”, reads the report.

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