Fitch sees 4.5% economic growth

International rating agency Fitch expects 2003 to bring solid economic performance for Romania, forecasting a 4.5% GDP increase, down from the 4.7% growth estimated for last year.
“The GDP growth will most likely be supported by the effects of salary raises on consumption and by the increase of investments, prompted by confidence from the business environment and by reforms. Moreover, exports were robust in the last quarter of 2002,” the rating agency says.
In a preliminary report on the Romanian economy evolution, Fitch Ratings also anticipates a cut in the average annual inflation rate to 15.4% in 2003, down from the 22.5% recorded last year. As for the budget balance, Fitch Ratings points to 2.7% deficit, the same as in 2002, with the current account deficit estimated to reach 4.3%, up from last year’s 3.5%.
On the other hand, the rating agency feels the main short-term risk for Romania is posed by the impact of a long war in Iraq upon the oil price, investments and investors’ trust.
“Still, the main risks for Romania’s rating are rather of a medium-term nature. The political will to continue reform is less visible than in Russia or Bulgaria, for instance, while corruption and unstable administration are also reasons for concern,” says Edward Parker, the analyst who penned the Fitch survey.
Furthermore, the report says the five years that brought poor economic performance for Romania were an effect of the economy’s lack of dynamism. According to the Fitch document, the Government should focus on effective control of public finances, privatisation, reform of the energy system and the labour market, and improving the business environment.
“The progress that the Romanian authorities will post in these fields in 2003 and 2004 will show whether Romania can meet its 2007 EU accession target, secure durable economic growth and thus obtain better ratings,” the Fitch analysts says.
The rating agency has granted Romania a “BB minus” rating for the long-term foreign currency debt.