EIU, downward revision of Romanian forecasts

The analysts of the Economist Intelligence Unit (EIU), a division of The Economist Group have revised their economic growth forecasts for Romania from 4.8% to 4.6% for 2003 and from 5.3% to 5.2% for 2004. The latest EIU report on Romania shows the economic forecasts were modified primarily because of certain signals of a slowdown in the industrial output growth and of the slower-than-expected recovery of the European Union economy. EIU anticipates the exports will also slow down this year, due to the unfavourable conditions in the EU. This will, however, be balanced by a higher investment volume supported by the privatisation process, and will allow the economy to attain 4.6% growth. This year’s state budget is built around a 5.2% economic growth rate. The investment increase will bring along an increase in imports, so that the current account deficit of the balance of payments is set to move up from 3.4% to 3.8% of GDP, only to go down to 2.8% of GDP in 2004. The general consolidated budget deficit will go up from 2.7% of GDP to 2.9% of GDP this year, due to the additional expenditures caused by the losses of the state-run companies and by the lack of salary discipline in those companies. The Government and the IMF agreed to pin the budgetary deficit to 2.65% of GDP this year. ZF