BCR Ups Romania GDP Growth Forecast To 2% In 2011

04.19.2011 By Florentina Dragu

Romania’s top lender Banca Comerciala Romana, or BCR, Tuesday revised upward its forecast on economic growth to 2% this year, from 1.2% previously, saying it expects a substantial increase in foreign capital inflows.

Romania's top lender Banca Comerciala Romana, or BCR, Tuesday revised upward its forecast on economic growth to 2% this year, from 1.2% previously, saying it expects a substantial increase in foreign capital inflows.

"The Romanian economy could advance by around 2%. We don't rule out an even faster recovery, aided by growing investments with direct foreign capital, as well as government-supported infrastructure projects," said Lucian Anghel, chief economist at BCR.

BCR estimates foreign direct investment will reach EUR4 billion in 2011, from EUR2.6 billion a year earlier.

However, Romania's economy continues to rely on domestic consumption rather than investments and productivity and changing the economic pattern will not be an "easy task," Anghel said.

On the other hand, BCR has revised its forecast on Romanian inflation to 5.2% in December, from 4.3% initially.

"Having assessed the impact of administered prices and recent political events in North Africa and the Middle East, we've decided to revise upward our inflation prognosis to over 5% at the end of 2011," Anghel said.

He said Romania could run a high inflation, of around 8%, until July, followed by a downward trend in the second half of the year.

Anghel added that the central bank is likely to keep its key rate unchanged at 6.25% throughout the year or even to increase it to 6.75%, depending on economic developments.

For 2012, BCR estimates an economic growth of 3.9%, while foreign direct investment is seen at EUR4.5 billion.