Romanian economy will grow by 5.5% in 2005, says EBRD

Romaniaa??s economy will grow by 5.5% in 2005, down from 8.3% in 2004, according to estimates presented by the European Bank for Reconstruction and Development (EBRD) at its annual meeting in Belgrade.

The same forecast was delivered by the International Monetary Fund, which expects growth to be more than three times higher than for the eurozone.

The authorities in Bucharest have announced a target of 5.5%-6% of GDP, though this may be revised in light of the continuing floods affecting Romania.

Besides the damage incurred to transport infrastructure, the floods are also affecting agriculture.

According to data from the Ministry of Agriculture, the floods have affected 172,414 hectares in 30 counties, with 49,817 hectares of crops and hayfields having been completely destroyed.

With the damage still spreading to new areas, the contribution of agriculture to the gross domestic product may turn out to be lower than forecast by the government.

The EBRD analysis shows that the prospect of Romaniaa??s and Bulgariaa??s planned accession to the EU in 2007, to be followed later by Croatia, will attract foreign capital inflows this year as a continuation of last yeara??s positive trend.

Less affluent Balkan states will continue to benefit from financing, but investment will be affected by the worsening global economic climate and high current account deficits will continue to be a reason for concern, the EBRD says.

The bank also encouraged the countries of the region to consolidate their economic ties as a means of ensuring political stability and attracting long-term foreign investment.

The EBRD has estimated economic growth for South East European countries at 4.9% for this year, compared with 6.4% in 2004.

Eastern European countries that joined the European Union last year will continue to enjoy accession-related capital inflows and will see economic growth of 4.7%, compared with 4.9% a year ago.