PM: VAT increase, flooding, international context lead to local economic drop; revival in 2011

The Romanian economy will drop by more than it was previously expected due to a series of decisions and measures taken this year, said Romanian Prime Minister Emil Boc. The VAT increase, the flooding and the international context have contributed to the slowdown. Emil Boc sees a revival of the Romanian economy next year. He is yet to put forward a value for both the GDP decrease expected this year and the increase for next year, but says one will be announced after consultation with the International Monetary Fund (IMF). Previous statements pointed to an economic drop between 1.7 and 1.9 percent for this year. The EBRD and Erste Bank expect an economic drop of 3 percent of the GDP, while Capital Economics, of 2.5 percent. However, the IMF head of delegation in Romania, Jeffrey Franks, said the 3 percent drop version was 'pessimistic'.