EBRD cuts growth forecast for Romania but keeps it among positive surprises

The European Bank for Reconstruction and Development (EBRD) worsened the economic growth forecast for Romania, to 0.8 percent for 2012, from the previous 1.1 percent growth forecast issued in October last year. Even so, Romania is mentioned among strong performing countries that became positive surprises. “Most countries grew faster than we forecast in October, with Romania leading the group with the largest positive surprise thanks to a better than-expected harvest. Romania was also one of the strongest overall performers in the third quarter among the new EU members, along with Latvia,” reads a recent EBRD report. Hungary's forecast was among the worst hit, with an expected drop of 1.5 percent in 2012, compared to a 0.5 percent growth estimate in October last year. Romania's inflation forecast is 5.8 percent for 2012, while the next foreign investment should reach 2.2 percent of the country's Gross Domestic Product, according to the EBRD. “Until recently, Romania’s economy was on track to record robust growth in 2012, after a modest recovery in 2011. However, the slowdown in the eurozone is already having a significant dampening effect on Romania’s exports, and further weakening is likely in the coming months. The Greek crisis has a dampening effect mainly through cross-border banking relationships. Continued IMF support provides an important buffer,” according to the EBRD report. The EBRD took into account several vulnerability indicators, such as The domestic foreign exchange loans in the total stock of loans – which is of 63.8 percent for Romania, the public and external debt – nonperforming loans – some 13.4 percent for Romania, and unemployment – 7.5 percent for the country. Neighbor Hungary scored lower on non-performing loans – with a rate of 10.2 percent. Read the full report here. Corina Saceanu, corina@romania-insider.com (photo source: EBRD)