Romanian economy's results in the first half of the year largely contradict the annual macroeconomic forecasts of the Government in spite of the adjustments made along the way.
With only a 4.3% economic growth in the first half, primarily sustained by stimulating consumption without any support from the industrial output whatsoever, which cannot seem to find a steady pace and an agriculture hit by drought, Romania might settle for a 4.5% GDP growth by the end of the year, compared with the official 4.8% forecast.
The most optimistic forecasts of the foreign analysts point to a growth of 4.6% in 2003, but the pace should reach 4.7%-4.9% in 2004. Pessimists, however, see a very poor economic performance in the second half of the year, marked by the worsening of the losses in the agriculture. This should push GDP's growth down to no more than 4%.
Surprises might occur along the way, though, the same as they did in the first quarter, due to the nature of the Romanian economy, most of which is not subject to taxes, either because it is about production aimed at self-consumption by households or because it dodges taxes.
The thing is the gross added value derived from the industrial output, which should be the main drive behind the growth, had barely exceeded a 3% growth pace seven months through the year. Agriculture is out of the picture, as its contribution might remain negative.
At the same time, the gross capital formation is below the half-year target. It is the consumption that has now turned into the economic growth drive, as it progressed by 5.4% in the first half, even though the annual forecast is of 3.9%. This is due to the expansion of the banking credit, as well as to the significant pay raises in those sectors where the state-run companies prevail, such as transports.
A performance above expectations in the first half was also registered by services.
"As far as the contribution of the various economic sectors to the economic growth forecast is concerned, the agriculture will be the main obstacle. If considered from the standpoint of the industrial output, the growth pace of the industry also seems to be significantly lower than forecast, which means the growth of 40% of the Romanian economy (industry and agriculture) progresses at half speed. Under the circumstances, seeing the 4.8% forecast attained at the end of the year would come as a very big surprise, " Radu Craciun, senior analyst with ABN Amro Bank comments.
Even though authorities were talking about inflation falling as sharply as to reach 12% if calculated December to December, Standard & Poor's rating agency analysts are now talking 14.5% for the end of the year. razvan.voican@zf.ro
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