Analysts expect recession confirmation in Q4

The economy remained in recession in the fourth quarter of 2010, with a 1% annual decline and a 0.3% quarter-to-quarter decrease, BCR analysts estimate.

The main cause behind the prolonged GDP contraction is estimated to be the continuously shrinking population consumption, as retail sales went down by more than 7% in December.

Raiffeisen Bank analysts also believe households' falling consumption expenses hurt GDP the most in the last quarter of 2010. However, Raiffeisen is counting on positive effects on the side of industrial production, narrowing external deficit and rising government expenditures, so that it "bets" on an economic decline near zero.

EBRD economists are much more downbeat, forecasting a 1.8% annual drop (the worst performance in the region) and a 0.5% quarter-to-quarter decline.

The National Statistics Institute is due to publish tomorrow the first estimates on GDP trend in Q4, 2010. For the entire 2010, GDP is expected to have contracted by around 2%.