Romanian Economic Status

Boc: This is the greatest increase in the last two years
     *  Analysts: The economy will grow more than 1.5% this year
     The GDP increased in Q3 2011 by 1.9% (in real terms), compared to the previous quarter, whereas compared to the same period of 2010 the advance was 4.4% (gross series), according to the latest estimates of the National Statistics Institute (INS).
     In seasonally adjusted terms, the economic growth between July and September was 4.5% higher than in the similar period of 2010.
     In the first nine months, the GDP increased 2.7% compared to the corresponding period of 2010 on a gross series and 2.6% on a seasonally adjusted series.
     Prime Minister Emil Boc yesterday said that Romania is on schedule to experience a growth of 1.5% and 2%, being the greatest increase of the last two years. He added that data published yesterday by the National Statistics Institute prove that the government's policy to invest and create jobs, was right.
     Emil Boc said: "We can conclude that Romania had four consecutive quarters of economic growth, namely the last quarter of 2010 and the first three of 2011, which proves that the country is on schedule to experience an annual growth of 1.5% and 2% for the year 2011".
     Dan Lazăr, secretary of state in the Ministry of Public Finance, said that the 4.4% advance of the GDP in the third quarter, was caused by the growth of the agricultural sector, according to Mediafax. Still, the "recovery" of the economy isn't being felt in the level of taxes collected, because agriculture isn't properly collected.
     Dan Lazăr said: "We are seeing a recovery of the Romanian economy, a growth of more than 4% of the GDP, which is making us optimistic. Unfortunately, on a fiscal level we haven't felt it so much, because agriculture isn't taxed. If things continue this way, then I say that the tax forecast for this year will be exceeded".
     The secretary of state explained that besides agriculture and construction, it was tourism and exports which contributed to the economic growth in the third quarter.
     The estimative data published by the National Statistics Institute have exceeded analyst expectations, which claim that under these circ***tances this year's economic growth will exceed the forecast of 1.5%.
     Lucian Anghel, chief-economist at the Romanian Commercial Bank (BCR), said that the data published by the National Statistics Institute represent a pleasant surprise. He added that Romania's growth will exceed the economic growth of 1.5% forecasted for this year: "Barring any dramatic drops in the next quarter, the economic growth should exceed 2%. Even if we didn't take into account the 2.6% growth of the agricultural sector, we would have still had an economic growth of 1.8%, which would be an improvement compared to the other quarters".
     Lucian Anghel says that the major issue is now what could happen in the future.
     He said: "This year, the economic growth will exceed 2%, but in 2012 we will see an increasingly reduced demand. Economic growth will depend on the way we will mobilize our resources for investments and on the manner of use of the European grants".
     Lucian Anghel added that this year's harvest may be hard to replicate and next year may be far weaker.
     *  Laurian Lungu: "I wouldn't be too certain of economic growth in the next quarters"
     Laurian Lungu, managing part-ner at "Macroanalitica", said that the estimative figures concerning the GDP show that we are in a recovery process which is slower than the average of the European Union.
     "I wouldn't be too certain of economic growth in the next quarters", he said.
     Laurian Lungu considers that this year's economic growth will exceed the forecasted level of 1.5%, but we need to be cautious because the international economic situation is deteriorating.
     "The idea is to find other engines of economic growth, such as domestic consumption (but not at the rate it had in 2007-2008), investments, even private ones and the European funds, because we have a lot of potential", he said.
     *  Melania Hăncilă: "For the first time since the onset of the crisis, the construction sector had a positive evolution"
     Melania Hăncilă, chief-economist at Volksbank, said that the estimative data of the National Statistics Institute concerning the GDP will cause the economic growth estimates to be revised.
     H added: "The figures published yesterday are above our expectations, which will cause us to revise our forecast for the entire year of 2011 upward, and we expect the GDP to grow 2.2% -2.4% YOY. The revision of the forecast is due to the agricultural sector exceeding expectations, by posting growth of more than 10%, as well as the industry maintaining a stable growth (approximately 5%). For the first time since the onset of the crisis, the construction sector has seen a positive evolution, due to the civil engineering works, funded predominantly by the government".
     Melania Hăncilă claims that the economic advance of 4.4% seen in the third quarter, compared to the same period of the previous year is due especially to agriculture and the increase in foreign demand, "and we therefore can't say that the Romanian economy has actually recovered, especially as long as consumption and investments maintain their negative dynamic".
     He said that this year's growth engines, namely agriculture and exports which have pulled industry behind them, are at high risk of seeing a slowdown in 2012, amid the deterioration of the state of public debt in the EU and the lack of major reforms in agriculture.
     The International Monetary Fund has maintained its forecast of a an economic growth of 1.5% this year, but has significantly lowered its estimate for next year to 1.8-2.3%. (Sorinel Draghici )