Romanian Commercial Bank forecasts 8% contraction of Romanian economy this year

Romanian Commercial Bank (BCR) expects the Romanian economy to contract by 8% this year, down from the institution’s previous 4.9% contraction forecast, a BCR report shows. For 2010, BCR analysts expect a slight economic growth of 0.2%.

The new BCR forecast is lower than the level considered by the IMF, which expects a drop of 8.8% of the Romanian GDP this year.

Romania reports a stronger economic contraction than other countries in the region, excluding the Baltic states and Ukraine, considering a fall of the current account deficit and a lower domestic demand, while credit slowed down considerably despite a relaxation of the monetary policy.

Bank analysts believe the economic decline would slow down towards the end of the year but at yearly level Romania would report economic growth in the second part of 2010 at the earliest.

BCR also forecasts that the inflation rate would reach 4.4% by the end of the year, within the National Bank target of 3.5% +/-1 percentage point. A previous bank prognosis spoke of an expected inflation rate of 5.5% this year.