EIU expects 4.5% economic growth

The economy will slightly speed up its pace of growth this year, to 4.5% against the 4% seen in 2005, according to the latest forecast released by analysts with the Economist Intelligence Unit (EIU). The GDP growth is estimated at 5.2% in 2007. The economic growth could pick up in 2007, when the forecast indicates a GDP increase by 5.2% in real terms due to investments and exports performing very well. For this year, British analysts estimate a noticeable drop in private consumption, as a result of a toughening of fiscal and monetary policies. “All macroeconomic indicators suggest that the current explosion of consumption, based on imports cannot be sustained over a longer period of time,” the EIU report reads. The investment process is expected to stay strong, with new and upgraded production facilities to enter the economic circuit, and big public investment projects to give rise to similar activities. The main risk taken into consideration by the EIU would be that the expected toughening of the fiscal policy may come too late or may be insufficient. In such a scenario, consumption would not drop as much as expected, which would lead to a faster, but more imbalanced economic growth. According to the Economist Intelligence Unit, a division of The Economist group, the probability for things to evolve in this way is relatively high, given the more and more obvious disagreements among governing parties on the economic policies, which diminishes their capacity to take coherent measures. ZF