IMF says lending backs growth

The Romanian economy will continue to see strong growth, particularly due to the high pace of lending growth, though this will ensure a continuing high current account deficit, the half-year International Monetary Fund (IMF) report shows. According to IMF estimates, Romania”s economic growth pace will remain at around 5% a year: 5.5% in 2005 and 5% in 2006. The National Prognostics Commission (CNP) has forecast 6% economic growth for 2005, after seeing 8.3% in 2004, with Gross Domestic Product expected to grow by 6.1% in 2006. The CNP expects the economy to grow by 6.3% and 6.5% in 2007 and 2008 respectively, giving an average annual growth pace of 6.2%. In terms of the current account deficit as a proportion of GDP, IMF forecasts indicate a reduction to 6.9% of GDP in 2005 and 6.3% in 2006. For its part, the national prognostics institute expects to see the current account deficit increase significantly; however, given the growth in GDP, it expects its share in GDP to fall to 6.2% in 2006 and 5% in 2007. CNP estimates a current account deficit as a proportion of GDP of 6.6% for 2005. The IMF, however, has warned that reducing the current account deficit will require tight fiscal policy and wage and lending controls. ZF