Raiffeisen expects stronger growth in Romania in second half of 2013, but EU funds essential

A new economic outlook from Raiffeisen Group foresees economic growth accelerating in the second half of the year in Romania, after a steady beginning. “After relatively modest economic growth in early 2013, an acceleration is possible in the second half of the year,” said a chief economist with Raiffeisen Bank, Ionut Dumitru.

The prospects in Romania should, according to Raiffeisen, reflect the picture across Central and Eastern Europe, where the same pattern of stronger growth later in the year is predicted. But Romania's sunny outlook for the second half of 2013 comes with important conditions. “Increasing economic growth depends to a large extent on the absorption rate of EU funds and progress in making structural reforms,” said Dumitru. The study foresees the RON/EUR exchange rate staying stable between RON 4.4 and 4.5 to EUR 1 throughout the year. Economist Ionut Dumitru gives some influencing factors: developments in the eurozone and their impact on appetite for risk, as well as developments on the local market, particularly in relation to the International Monetary Fund (IMF). At a global level, the study also foresees improvements later in the year. “Economic activity in Europe, and in the USA, remains sluggish. Although leading indicators, such as the ISM and the ifo index, are continuously pointing to better sentiment amongst companies, the improvement has yet to be confirmed by hard facts, such as new orders,” said the head of Raiffeisen Research Peter Brezinschek. But he appeared hopeful for the future, predicting that even before mid-year, net exports should bring the first signs of economic growth and subsequently stimulate investments. A continuation in the North/South eurozone economic divide is foreseen, with Germany and surrounding eurozone countries looking strong and Italy, Spain and the rest still struggling. GDP in the CEE region is expected to rise 2 percent in 2013, the same as in 2012. In Central Europe 0.5 percent growth is foreseen, slightly less than last year (0.6 percent), while South Eastern Europe should see some 0.9 percent growth in 2013 after a 0.3 percent fall last year, according to Raiffeisen Research. Raiffeisen posted EUR 88 million in profits in 2012 in Romania, and total assets worth assets were worth EUR 5.31 billion. Total loans stayed at EUR 3.52 billion in 2012. Vienna-based Raiffeisen Bank International AG (RBI) owns 99,49 percent of Raiffeisen Bank’s shares. The group regards Austria and Central and Eastern Europe (CEE) as its home market. In CEE, RBI operates an extensive network of subsidiary banks, leasing companies and a range of other specialized financial service providers in 17 markets. editor@romania-insider.com