Economy still in recession after Q1

Romania was still in recession in the first quarter, and hopes for a rebound have been moved to the second quarter of 2010, analysts say.

Analysts have revised estimates for the first quarter as a result of the lower than expected performance of the industrial output in February and of the continued decline of the construction sector and consumer spending.

“The economy remained in negative territory, witnessing 0.4% decline compared with the same time in 2009. Services and construction dragged the GDP down. The industry had a strong start of the year but slowed down in February. Still, the contribution of the industry was positive. A positive influence from agriculture is of not out of the question, either, considering the base effect,” commented Rozalia Pal, chief economist of UniCredit-TiriacBank.

She added the construction sector had yet to rebound and the investments were negative, as well.

The IMF is preparing to revise this year’s economic growth forecast for Romania downwards from 1.3% to 0.8-1% of GDP. UK’s Barclays’ bank analysts, too, have recently announced the recession may be W-shaped.