Oxford Economics Rises Romania GDP Forecast To +1.2% In 2011

05.04.2011 By Florentina Dragu

Oxford Economics has revised upward its forecast on Romanian economic growth to 1.2% in 2011 from 0.1% previously, saying it expects higher exports and improved performance in industry.

"There have been encouraging signs in the rest of the economy, as the recovery appears to be gradually broadening, with sentiment in all sectors having improved this year, boosting employment expectations," Oxford Economics said in a report.

It said net exports remain the most important driver behind the recovery, while confidence in the industrial sector continued to improve in March and the sentiment indicator was in positive territory for the second month in a row.

However, consumer spending "remains under pressure from sharp real wage cuts and the fiscal squeeze," the report showed.

A significant risk to the forecast comes from rising inflation, which reached 8% in March, driven by surging food and commodity prices, Oxford Economics said.

The institution estimates the Romanian central bank will not cut its key rate below 6.25% a year during 2011.