Romania GDP Quickens to 4.4% on Harvest, Exceeding Estimates

Romanian economic growth accelerated in the third quarter to the fastest pace in three years as a bumper harvest compensated for weak domestic demand, raising prospects that this year’s expansion will top estimates.

Gross domestic product rose 4.4 percent from a year earlier, compared with 1.4 percent in the second quarter, the National Statistics Institute in Bucharest said today in an e- mailed flash estimate. The figure exceeded the median estimate of 2.3 percent in a Bloomberg survey of eight economists. Detailed GDP data will be published on Dec. 6. Seasonally adjusted GDP advanced a quarterly 1.9 percent.

Romania, which exited its worst recession earlier this year, will probably see economic output grow 1.5 percent in 2011, helped by demand for the products such as Dacia SA cars, according to government and IMF forecasts. Today’s data matched figures released late yesterday by President Traian Basescu.

“We have growth of 4.4 percent in the third quarter and let’s hope we’ll post 2.5 percent growth in the fourth quarter, which would allow us to have economic growth of more than 2 percent this year,” Basescu told state television TVR1 yesterday. “Growth was driven by construction, agriculture and industry, while consumption is still low.”

GDP was boosted by a 25 percent increase in output in agriculture, a 7.2 percent jump in construction and 5.5 percent increase in industry, Basescu said.
‘Real’ Growth

Agricultural output was probably the main driver as it posted “real double-digit growth,” Banca Comerciala Romana SA economist Eugen Sinca wrote in an e-mail note to clients after the estimate was released.

Growth in the export-driven economy will probably slow next year to between 1.8 percent to 2.3 percent, compared with a previous forecast of 3.5 percent, as Europe’s debt crisis slows growth in Romania’s major trading partners, Jeffrey Franks, the International Monetary Fund’s mission chief to Romania, said on Nov. 7.

“We have put under revision our 2011 economic growth forecast and the new estimate will most likely stay at above 2 percent,” BCR’s Sinca said. “We’ll revise downwards the outlook to below 1.5 percent in 2012 as lower external demand, an ambitious fiscal consolidation program followed by the government and a negative base effect in agriculture will weigh on the next year’s growth prospects.”

The leu was little changed at 4.3643 per euro in Bucharest trading as of 11:32 a.m., while the Bucharest Stock Exchange’s benchmark BET index fell 0.2 percent to 4,519.39.
Rate Cut

Policy makers unexpectedly cut the monetary policy rate by a quarter of a percentage point to a record 6 percent on Nov. 2 to spur a recovery after inflation in September was the slowest in two decades. A day later, the European Central Bank lowered its benchmark interest rate as the debt crisis drags the euro- area economy toward recession.

The GDP figure “was obviously an encouraging reading, placing Romania among the top growers in the European Union in the third quarter,” Simon Quijano-Evans, the London-based head of emerging-market research at ING Groep NV, said in an e-mail. “However, regional focus is now on 2012 being hit by spillover from the major trading partners in the Eurozone.” (Romania News Watch)

Romania Real Estate Report Q4 2011 - new market research report

London 10/24/2011 12:58 AM GMT (TransWorldNews)

Romania has finally exited its deep, two-year-long recession. Exports have surged to new all time highs, as demand from Asia and Europe (especially Germany) has surged. This lift has seen the unemployment rate drop from 8.4% in March 2010, to 5.9% in March 2011.

The commercial real estate market in Romania is expected to recover reasonably well over the next few years, as the rest of the economy regains its growth.

Some of the key opportunities currently in the real estate market are:

- Increased industrial production will lead to a demand for more industrial property to be developed. We are expecting rents for industrial property in Bucharest to rise by between 8 and 10% during 2012.

- EU funding for much-needed infrastructure projects will become available over the next few years.

- New construction projects are beginning to emerge, and activity in the building industry will pick up through the rest of the forecast period.

- In July 2011, the Fitch agency raised Romania's credit rating, bringing it back into the range recommended for investments.

Some key risks to the current real estate market are:

- The country remains financially fragile, and the supply of credit may prove a limiting factor to expansion, both economy overall, and more particularly in the real estate sector.

- Any rapid expansion will be constrained by the shortage of skilled construction industry labour.