New Forecasts For Romania's 2011 GDP Growth Climb Towards 2%

05.24.2011 ZF English

Analysts of local and foreign banks, as well as international financial institutions have improved or are thinking to revise upwards their forecasts about Romania's economy in 2011, with most new estimates on the GDP growth moving from 1% towards 2%.

The 2011 GDP forecasts started to improve both after the announcement of the better than expected data about the performance of the economy in 2010, as well as a result of better than expected performance of the industry and exports in the first few months of this year, which led to the second consecutive quarterly economic growth in the January-March period.

The European Bank for Reconstruction and Development at the end of last week revised upward its forecast for Romanian economic growth to 1.8% in 2011, from 1.1% previously.

The change comes after the country's statistics institute announced the first quarter economic growth data in mid May.

This is the third revision of EBRD's forecast in six months. In December 2010, EBRD revised its forecast from 0% to 0.9% only to revise it again to 1.1% at the end of January 2011.

The International Monetary Fund and the European Commission kept their forecast for this year's growth at 1.5%. The fund expects next year's GDP to rise by 3.75%-4%, while the European Commission predicts a 3.7% growth.

Over the last few years, analysts and international financial institutions' forecasts have been proven wrong by reality.

BCR, the biggest local bank, revised its economic growth forecast from 1.2% to 2% in April and does not rule out the possibility of a faster economic recovery, as it sees FDI at EUR4 billion from EUR2.6 billion in 2010. It also sees 3.9% economic growth as likely next year.

BRD-SocGen, the second largest local bank has recently revised its economic growth forecast to 1.5% in 2011 and 3% in 2012.

The most pessimistic local bank is ING Bank, which anticipates 0.6% growth, but intends to revise its forecast once the detailed GDP data for the first quarter have been revealed on June 8.