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Merrill Lynch: Romania’s economy will see a 6.4% drop this year 

Marţi, 26 mai 2009, 18:08 English | Top News

Romania’s economy will drop "abruptly" in 2009 and 2010, recording a drop of 6.4% and 2.5%, respectively, following the fiscal adjustments agreed upon with the IMF, according to Romanian press agency NewsIn, and quoting Bank of America Securities-Merrill Lynch prognosis for Romania.

The institution’s analysts foresee Romania’s inflation rate reaching 5.2% this year and decreasing to 4% in 2010. This exceeds Romania’s Central Bank (BNR) inflation prognosis, which saw 3.5% rate, +/- one percentage point. The inflation recorded for 2008 was 6.3%.

"Growing fiscal and external deficits remain Romania’s chief problems, but the economic recession and the enforcement of the fiscal programme should lead to the reduction of Romania’s fiscal deficit in 2009 and 2010. Following the agreement with the IMF, we downgraded our prognosis for the 2009 fiscal deficit to 4.6% of the GDP from our previous estimation of 7.5%. We expect the current credit deficit to level at 8% of the GDP in 2009 and to 6.5% in 2010", shows the Bank of America Securities-Merrill Lynch report.

The group’s analysts anticipate the national currency leu to depreciate to 4.50 lei per euro in 2009. They see a rate of 4 lei per euro in 2010.
 
Bank of America-Merrill Lynch representatives estimate that BNR will drop the interest rate for monetary policy from 9.50 to 8%. According to the analysts, this will be achieved in three steps, seeing a drop of half percentage point in June, August and September. The same interest rate is estimated to record 6% in 2010. 























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