Moody's predicts recession for Romania in 2009

The financial evaluation company Moody’s predicts economic recession for Romania in 2009, with a GDP decrease of 0.3%, the agency’s analyst for Romania, Kenneth Orchard declared for Romanian TV station The Money Channel. he added that the analysis of the agency took into account the global lack of liquidity and the decrease in growth of the main European economies.

The liquidity crisis is bigger than estimated and it is going to weight a lot in the evolution of the Romanian economy. The current account deficit will also have a powerful evolution and imports will register a significant decrease, he said.

He expressed his hope that the new Romanian government would understand that the economy is in a difficult situation and there would be serious problems in managing the deficit. In his opinion, the credit market will recover in the next six months but it will never recover fully.

Moody’s estimates that domestic demand will drop due to a decrease in credits and households will consume less which will have a positive effect in a decrease of imports and of the budgetary deficit.

Orchard said that the agency does not predict unemployment rates or the exchange rate fluctuation but Moody’s analyst said that pressures would continue.

UPDATE: Romanian PM Calin Popescu Tariceanu responded on Monday by saying that Moody’s had a problem when it comes to full knowledge of the Romanian economy. He said that while Romania’s economy would be affected by the international crisis and a slower GDP growth should be expected, he would rather take into account European Commission expectations of a Romanian GDP increase of 4.9% next year.