Erste: Romania's economy likely to go up 2.2% this year if good crops

Romania's economy could go up by 2.2 percent this year if it manages to record good agricultural crops, which seems likely, according to a recent Erste report. The economic increase forecast is higher than in previous similar reports. “Romania should be among the strongest growing economies in the region, while the valuation is more than attractive and the growth outlook confirms the sound standing. Currently, pending privatizations might have a reasonable chance to finally help break the liquidity trap. However, for most of the third quarter, liquidity might remain a show-stopper, that’s why we still tend to assign a moderate overweight for those who can deal with small sizes,” said Henning Eßkuchen, Head Equity Research CEE, author of the report. He added: “Despite the gloomy outlook in the Euro Area, some CEE countries have been gaining momentum. Hungary and Romania, the first two countries that started with tough consolidation in 2009 and the first to successfully exit the excessive deficit procedure this year can catch some breath.” The basic economic increase for Romania for this year is of 1.8 percent, but it has potential to reach 2.2 percent in case of good crops. In 2014, the Romanian economy could go up by 2.3 percent. Erste's forecast is among the optimistic ones, as the European Commission's forecast is of 1.6 percent increase, similarly to the International Monetary Fund's and the Romanian Government's. For 2014, the forecast from the European Commission stays at 2.2 percent, while the IMF sees a 2 percent increase for Romania. The World Bank expects an economic growth of 1.7 percent this year, and 2.2 percent the next, while the European Bank for Reconstruction and development, 1.4 percent this year, and 2.2 percent next year. editor@romania-insider.com