Fifth successive quarter of economic contraction

Romania’s economy remained weak throughout the third quarter this year, contracting at 0.7% quarterly rate, and by 7.1% from the same period of last year, statistical office said. This is the fifth successive quarter of decline in Gross Domestic Product from previous quarter, but the rate fell in third quarter this year to the lowest since Q3 2008.

The first quarter of negative GDP growth has been Q3 2008, when the economy fell 0.1% into the negative territory. Contraction deepened further into the following quarters by 2.8% in Q4 2008 and by 4.6% in Q1 2009 only to show the first signs of recovery with 1.1% decline rate in Q2.

Q3 data are seasonally adjusted while third-quarter 2008 data are unadjusted.

For January to September this year, the economy fell 7.4%, below the six-month decline of 7.6%.

Romania’s economic growth could turn positive in the first three months of 2010 from previous quarter, said the chairman of the National Prognosis Commission (CNP), Ion Ghizdeanu (photo). He added he didn’t roll out the likelihood of a positive or near 0 growth in the final quarter of this year.

“As of next year, the economy will be back at its growth rate (on a quarterly basis). It is not excluded to see a positive economic growth as soon as in fourth-quarter, or at least near 0. Compared to fourth quarter 2008, the economic contraction will be lower than expected, of 5.6% from annual projection of 7%”, said Ghizdeanu.

In a more positive note, the head of CNP said he expects the GDP to climb 1.2% in 2010, compared to initial forecasts of 0.5%, should the positive trend remain.

The National Prognosis Commission (CNP) said it maintained its full-year forecasts for a Gross Domestic Product contraction of 7.7%, as well as for an economic growth of 0.5% in 2010, in its final autumn report.

However, the institution has cut its forecasts for GDP’s nominal value for 2009 from 498.96 billion lei in its preliminary autumn report to 497.32 billion lei. For 2010, forecasts have been revised slightly from 526.53 billion lei to 525.1 billion lei.

Romania could be back at its trend growth rate as soon as in fourth quarter this year on a quarterly basis, a recovery expected to be led by exports, fueled by external demand if the internal demand cannot be resuscitated, economists say.