Analysts: Lending growth will slow down to 5% in 2009

"In 2009, I expect an abrupt slowdown in lending to around 5% toward yearend. The slowdown is likely to be steeper on the segment of the population," considers Nicolaie Chidesciuc, senior economist with ING Bank.

More upbeat, the chief economist of BRD-GSG, Florian Libocor, believes there is the chance the lending rate should just reach half of this year's level, projecting an increase of around 15-20%. The NBR also put the 2009 lending growth rate at 15%. The slow pace of lending will strongly reduce both private consumption and investments and we will implicitly have lower economic growth in 2009, says Chidesciuc.

Still, Romania can see itself as being "lucky", in analysts' opinions, given the low banking intermediation level. "(...) With a non-governmental credit of around 40% in GDP, companies and the population's dependence on banking loans is significantly lower than in other CEE countries (...)," explains Raiffeisen Bank chief economist Ionut Dumitru.

However, there is high uncertainty regarding the way companies and households will react to the tighter lending conditions. Risks are relatively reduced by a certain stability and rigidity of Romanian consumer spending.

Lending will most likely be mainly fuelled by the RON component, as the NBR is expected to further cut RON minimum compulsory reserves, now standing at some 20bn RON. NBR governor Mugur Isarescu has recently showed he expected a strong deceleration of foreign currency lending as banks will no longer easily receive financing from their foreign stakeholders. In a neutral to upbeat scenario, economic growth would cool down to a 4-5% growth rate in 2009 amid an ordered lending reduction, particularly on the foreign currency side, which could even lead to positive effects, of consumer spending cooling and weaker current account and inflation pressures, says Dumitru. However, "Uncertainty is the word of the day. Pessimism is quite tempting, but I don't believe that on the basis of existing information we can anticipate a recession scenario as the most likely (...)".