The Economist Intelligence Unit (EIU) division of The Economist Group has positively reviewed its forecasts about the Romanian economy growth in its latest report. However, it warns about certain risks concerning the release of the fourth tranche of the agreement with the IMF.
Whereas EIU's previous report on Romania was anticipating the Gross Domestic Product to go up 4.6% this year, it now anticipates it to progress by 5%. It also changed its 2004 estimates, expecting to see the GDP go up by 5.3% instead of the 5% in the previous report.
The British institute estimates the 2002 economic growth to have reached 4.9%.
"We have positively reviewed our estimates, following the announcement of the Development and Prognosis Ministry about the 5.2% growth forecast and of National Bank of Romania (NBR)'s 5% growth forecast," the EIU report shows.
The survey highlights significant changes in terms of Gross Domestic Product makeup this year. Whereas agriculture-related revenues went down seven percentage points in 2002, they are projected to increase by 3% this year.
As regards the trend of the industry and service revenues, EIU anticipates 7.8% and 6.5% growth in 2002, with 7% and 4.1% growth estimated for 2003.
EIU forecasts inflation to reach 13.7% by yearend and 11% by the end of 2004, while the average inflationary rate is projected to reach 15% and 12% respectively.
The current account deficit might go up, the British analysts say, reaching 5% of GDP this year, given a sound investment growth set to boost imports, as well, only to fall to 4.5% of GDP in 2004.
"This course shows an expected drop in oil prices, but also powerful import growth," the EIU report mentions.
The British institute's estimates for last year show the current account deficit to have reached 3.8% of GDP ($1.7bn).
On the other hand, when considering the stand-by agreement with the International Monetary Fund, EIU warns that having the fourth tranche released in time is up to the determination of the authorities in Bucharest to attain the public sector salary-related goals.
The IMF Board is supposed to debate the release of the fourth tranche for Romania early in April, yet the EIU report points out it may happen later.
EIU also warns that the terms of this agreement will keep conditioning Romania's economic programme with an emphasis on the fiscal consolidation, but also on the restructuring and privatisation of the state-run companies.
When it comes to the overall prospects of Romanian economy, the institute says the slight rebound of the international economy this year could fuel Romania's exports growth. "Still, the main GDP growth factor could be speeding up investments, given that the privatisation process has been given a new impetus," the EIU analysis shows.
EIU also points out the risks of the foreign indebtedness. "The foreign debt is seriously going up, and overborrowing could create problems in their service. The short-term foreign loans of the commercial banks should be the most closely monitored," EIU feels.
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