Govt. too upbeat about targets, says EIU

The Romanian government”s macroeconomic targets for the period 2005-2008 and medium-term growth forecasts are ambitious and too optimistic, reads the latest report by the Economist Intelligence Unit (EIU). Government forecasts point to real growth in Gross Domestic Product by almost 7% per year, with inflation reaching 3% by December 2008. The current account deficit will be reduced to 4.9% of GDP in 2008, according to government estimates, but will remain above the 5% of GDP threshold during the 2005-2007 period. The EIU report, as quoted by the reporter.gr news site, shows that the medium-term growth forecast is too optimistic, especially given the inflation predictions, and it assumes annual average real growth of GDP of just under 5%. To bring inflation down to around 3% by December 2008 could involve a negative trade-off in terms of economic growth, EIU analysts say. “Although we assume a slightly higher yearend inflation rate in 2008, we nonetheless expect growth rates in 2008-2009 will be held back by efforts to bring down inflation to meet the Maastricht criterion by 2010,” they said. ZF