Investments and consumption to drive economy in 2011, European Commission anticipates

The European Commission expects investments to pick up next year, and become one of the drivers of the economy, with net exports to have a negative contribution, but warns about the risks of suspending fiscal consolidation measures.

"After falling severely in 2009 and 2010, investment should pick up vigorously, by 4.2%, and is expected to be a main driver of growth as companies re-adjust their production lines to meet the increased external demand. Exports have maintained their strong momentum throughout 2010, and together with the jump in industrial orders, this development is expected to re-assure companies," reads the autumn economic forecast of the European Commission.

However, imports will again rise faster than exports, so the impact of exports on the GDP will be negative.

Brussels' executive arm anticipates a 1.9% economic decline this year, followed by a 1.5% rise in 2011, fuelled mainly by investments, with forecasts being similar to IMF estimates.

Investments are expected to climb 4.2% next year, after falling by 25.3% and 9.9% in 2009 and 2010 respectively.

Domestic demand, the main growth driver of the Romanian economy in the years of boom up to 2008 and the indicator with the steepest decline when recession set in, will see only marginal growth next year, amid a slight salary increase.

Domestic demand is expected to once again play an important part in economic growth as of 2011.