Top 10 economic forecasts for 2010

Although the Romanian economy could contract by as much as 8% this year, analysts expect the country to do better in 2010 and achieve positive growth, however modest that may be. Wall-Street highlights the ten most important forecasts for the Romanian GDP in the year to come.

10. Capital Economics: -0.5%

Romanian GDP growth is expected to remain negative for the second year in a row, following worsening unemployment outlook, growing external debt and continued cost-cutting efforts. The GDP will remain in the negative territory even if the National Bank of Romania says the country has emerged from recession, said Neil Shearing with Capital Economics.

“It is early and worrying to talk about an economic recovery. The outlook has improved, but numerous risks point to a further negative GDP. In our view, the economy will contract by 0.5% in 2010”, said Neil Shearing, emerging markets economist.

9. Banca Comerciala Romana: +0.2%

Banca Comerciala Romana said Romania’s GDP is likely to turn positive in 2010, but by as little as 0.2%. BCR economists have raised their economic contraction forecasts for 2009 from 4.9% to 8%.

Romania suffered an economic contraction of 8.8% in second quarter this year and 7.6% in the first six months on a yearly basis after hefty growth rates in 2008.

Read more on BCR's forecasts.

8. National Prognosis Commission: +0.5%

The National Prognosis Commission (CNP) said it had 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.

7. IMF and EC: +0.5%

Romanian economy will contract by 8.5% this year, and is likely to return to a modest positive growth of 0.5% in 2010, said the International Monetary Fund in its World Economic Outlook, IMF predicting the largest output gains in Poland and Turkey of all European emerging countries.

In case of Romania, IMF said after the first review under the aid deal, the country’s GDP would decline by 8-8.5% this year, and would turn positive in 2010. IMF has revised its full-year economic forecasts for Romania from -4.1% for 2009.

European Commission has also revised its forecasts for Romania bringing them in line with IMF’s estimates, according to the autumn forecasts. EC is thus expecting an economic contraction of 8% in 2009 and an economic growth of 0.5% in 2010.

6. European Bank for Reconstruction and Development: +1%

For 2010, the European Bank for Reconstruction and Development has improved its GDP outlook, expecting a mild 1% growth, up from 0.4%.

EBRD has also revised its full-year forecasts for 2009 to 8% from a solid growth of 7.1% a year earlier.

5. Moody�s ratings: +1.2%

Romania’s economy is unlikely to emerge from recession until the second half of 2010, and a recovery will probably set in a year from now, according to Kenneth Orchard Senior Analyst in Moody's Sovereign Risk Group, the only financial rating agency that decided to keep Romania’s status within the investment-grade parameters.

Vice President-Senior Analyst in Moody's Sovereign Risk Group, Kenneth Orchard said the country’s economic contraction would most likely be in the range of 8.9%, while for 2010, the analyst sees a mild growth of 1.2%.

Read more about Moody's projections for Romania ...

4. Alpha Bank: +1.5%

Alpha Bank has lowered its projections for Romania’s economic performance in 2009. The bank predicts a GDP contraction of 6.5% versus previous 3.1%. For 2010, the Greek-based group estimates a growth of 1.5%, according to Alpha Bank’s quarterly report.

According to the group, Romania will suffer the steepest economic contraction of all countries in the region, but compared to the euro zone in 2010, the country will undergo the fastest recovery, with an increase in Gross Domestic Product.

3. ING Bank: +1.6%

ING Bank has raised its GDP forecasts for Romania for 2010, to +1.6% from -0.6%.

ING says the growth expected for 2010 should have the same magnitude as the 2009 collapse.

2. Fitch Ratings: +2%

Fitch forecasts Romania’s GDP growth will turn positive in 2010 to around 2% after the 7.5% contraction projected for this year, the rating agency said in its “Emerging Europe Sovereign Review: 2009”.

Fitch Ratings projects Romania’s general government debt at 30.1% of GDP this year, at a wide margin from 21.5% last year. For 2010, the agency expects 34.2% government debt. Fitch said the country’s Gross Domestic Product was likely to grow by 4% in 2011.

1. Mugur Isarescu�s projections

The governor of National Bank of Romania said he had maintained the optimistic view on the country’s economic performance. He said he expected the GDP to turn positive as soon as in third quarter, or fourth the latest on a quarterly basis, as the factory output, which in theory gives the first signs of recovery, had improved since the first part of the year.

“If we consider data on factory output, the economy has already gone up and is on track for a complete recovery. In industry, we started from -12% and now we are at -6%, as data are released with two months delay, and GDP data with even a longer delay”, said Mugur Isarescu (photo), the governor of National Bank of Romania.