Moody's improved Romania's economic estimates for 2010

Moody’s estimate that Romania’s economy will increase this year by 2.3%. The financial evaluation agency improved Romania’s prediction from October 2009, when it estimated a 1.2% progress of the GDP, according to Romanian news agency NewsIn. At the same time, the agency expects a 6.3% of the GDP budget deficit, slightly below the previous prognosis (6.4%).

„The macroeconomic data suggest that the recession is drawing closer to its end and Moody’s believe that the economy will pick up growth in the second semester of 2010. Exports stabilised and access to liquidity on the local market improved in the last six months. , which should support the economic re-launch this year”, a Moody’s communiqué shows.

Nevertheless, Moody’s expect the Romanian economic progress to be slower in the first few years due to a more moderate growth in most of the European economies and due to a weak increase in credit.

Regarding the current account deficit, the financial evaluation agency believes there will be a correction in Romania, namely up to 3.5% of the GDP in the end of 2010.

Plus, Moody’s assessed the governmental financial power as „average”, following the small public debt and a fragile fiscal context. According to the estimates, Romania’s public debt will amount to 27.4% of the GDP towards the end of the year.

„Even if the average salary stays way below the euro zone average, this went up significantly during the last ten years and the increasingly stronger institutional, financial and commercial integration in Europe should support real convergence on a long-term”, the report shows.

On the other hand, the rating agency estimates 3.5% inflation in 2010 in Romania.