The third quarter could see record economic growth for Romania - 10% or even higher, based on a peak contribution from the agricultural sector, which means GDP growth could come close to 9% at the end of the year, according to analysts estimates.
Romania has never seen such quarterly double-digit economic growth. ING Bank analysts have revised their forecast concerning the GDP's trend for the entire year by one percentage point, from 7.8% to 8.8%.
"Agriculture is expected to provide a significant contribution to the GDP formation in the third quarter, which is usually when the growth peak happens. Considering the volatility of this component, we would like to point out that we cannot rule out GDP growth of over 10% in the third quarter," says Nicolae Chidesciuc, senior analyst of ING Bank Romania.
He says he was taken by surprise by the contribution of the agricultural sector in the second quarter and as such ING's forecast was exceeded by almost one percent. The new annual growth estimate of agriculture for the third quarter is put at about 15%.
In addition, Chidesciuc believes that recent data about solid industrial output and strong retail sales are the first signs that confirm the forecast, as well as additional GDP growth in the third quarter.
ING feels the NBR should not be too worried about the speeding up of economic growth, considering it is mainly a case of extra supply.
ABN Amro, in turn, has revised its economic growth forecast for 2008 by no less than 0.9%, from 7.6% to 8.5%.
"We believe the new figure is quite conservative, as surprises may arise, because it is difficult to estimate agricultural yields," says Catalina Constantinescu, senior economist of ABN Amro Bank Romania. However, she anticipates a fast slowdown for 2009 to 4-4.5%.
An around 8.5% growth rate is also the forecast of the head of Bancpost's research department, Dan Bucsa, who says that over 10% growth could happen in the third quarter if the agricultural yield, registered mainly in the GDP in the third and fourth quarters, is very good, and the other economic sector do not slow down significantly.
The head of Raiffeisen' research department, Ionut Dumitru, believes we could see an almost 9% economic growth this year.
"If we consider agriculture, third quarter economic growth could be even higher than in the second quarter, somewhere between 9.5-10%, given that agriculture could make the highest contribution to the GDP in the last two quarters of the year."
On the other hand, the GDP trend without considering agriculture's contribution, will see a slowdown, Dumitru feels.
"The economic activity reached a high in the second quarter and we can expect to see it slow down over the coming quarters in the wake of a very restrictive monetary policy, of stricter lending conditions (both interest rate increases and more restrictive lending conditions) and of a slowdown or even a recession in the eurozone that is expected. Yet this slowdown will only show in the GDP's growth without including agriculture," Dumitru explains.
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