Romania monthly economic review
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5 Ianuarie 2009 |
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ERNST & YOUNG S.R.L. |
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Latest developments
Prognosis of main macroeconomic indicators in the 2009 - 2012 Government Programme
The budget revenues forecast for 2012 stand at 35.9% of GDP, under the new Government Programme for the 2009 - 2012 period. The expenditures forecast for 2012 stand at 36.2% of GDP. For 2008, the budget revenues are forecast at 32% of GDP, and expenditures at 35.5% of GDP. For 2009, the expenditures are forecast at 34.2% of GDP and the revenues at 32.5% of GDP. In 2010, the budget revenues will represent 34% of GDP, and the expenditures 35.6% of GDP. The forecast for 2011 shows revenues of 35.1% of GDP and expenditures of 36.2% of GDP. Under the Programme, the deficit of the consolidated general budget is forecast at 3.5% of GDP in 2008, at 1.7% of GDP in 2009, 1.6% of GDP in 2010, 1.1% of GDP in 2011 and 0.9% of GDP in 2012. The current account deficit forecast for 2008 stands at 13.3% of GDP, 10.1% of GDP in 2009, 9.7% of GDP in 2010, 9.3% of GDP in 2011 and 8.8% of GDP in 2012. GDP is forecast at RON 505 bn in 2008, RON 582.7 bn in 2009, RON 660.7 bn in 2010, RON 745.9 bn in 2011, and 838.1% in 2012. The forecast real rise in GDP in 2008 stands at 8.5%, 3.5% in 2009, 4.5% in 2010, 5.5% in 2011 and 6% in 2012. The forecast average inflation will be 7.9% in 2008, 5% in 2009, 4% in 2010, 3.5% in 2011 and 3% in 2012. The forecast gross average salary stands at RON 1,700 per month in 2008, RON 1,830 in 2009, RON 2,070 in 2010, RON 2,340 in 2011 and RON 2,635 in 2012. The forecast net average salary is RON 1,580 in 2008, RON 1,702 in 2009, RON 1,925 in 2010, RON 2,175 in 2011 and RON 2,450 in 2012. The programme reads the forecast value of the macroeconomic indicators presents a degree of relativity caused by the uncertainties caused by the financial and economic crisis.
Romania, trade deficit of EUR 17.2 bn in 9 months
The European Statistical Institute (Eurostat) on Thursday confirmed for Romania a commercial deficit of EUR 17.2 bn in 9 months of 2008, compared to EUR 15 bn over the same period in 2007. Eurostat shows that exports reported a rise of 20%, up to EUR 25.8 bn, in the first 9 months of this year from EUR 21.6 bn over January-September 2007. Imports grew 17%, up to EUR 43 bn, over January-September 2008, from 36.6 bn in the same period of 2007. According to Eurostat, the commercial balance of the Euro Area (EA15) in October 2008 reported a rise of EUR 0.9 bn, as against a surplus of EUR 4.2 bn in October 2007. The exports of the euro area reported in October 2008, compared to the previous month a reduction of 2.5%, whereas imports went down 4.6% age points. In the EU (EU 27), the deficit of the trade balance grew in October to EUR 17.1 bn from EUR 15.3 bn in the previous month. In October 2008, as against the previous month, the EU exports reported a reduction of only 2%, whereas imports reported a diminution of 4.5%. Over January-September 2008, the energy deficit of the EU 27 grew up to EUR 282.9 bn, as against EUR 191.4 bn in the same period of 2007, whereas the surplus of consumption for equipment and vehicles grew over January-October this year to EUR 116.1 bn, compared to a surplus of EUR 89.1 bn over January-September 2007.
CA deficit widens 11% y/y to EUR 14.4 bn in January-October
The CA deficit expanded by 11% y/y to EUR 14.4 bn in January-October maintaining the same share in the projected full-year GDP (10.7%) as last year. The full-year CA gap was EUR 16.7 bn or 13.7% of GDP in 2007. The CA gap over the past 12 months reached EUR 18.1 bn or 13.4% of the projected full-year GDP. Weakening domestic demand is expected to contain the CA ratio to GDP next year in a more visible manner and the gap may even narrow in nominal terms. The World Bank has recently projected the CA gap at 8.6% of GDP next year but nonetheless any projection is subject to uncertainty as key endogenous and exogenous variables remain volatile. On the financial side of the balance of payments, FDI increased by 30% y/y to EUR 8.2 bn in January-October and it covered 57% of the period’s GDP from 48% last year. In the past 12 months, the FDI cumulated EUR 8.9 bn, from EUR 7 bn in 2007, and covered 49% of the period’s CA gap. The FDI coverage of the CA gap hovers around much lower levels on the lack of privatization activity and this increased the vulnerability in terms of foreign borrowing. The central bank’s reserve assets inched up by EUR 224 mn in January-September, compared to the EUR 4.3 bn surge last year, according to the central bank. Widening foreign trade gap, higher external debt service and thinner inflow of foreign debt were only partly offset by the stronger FDI and transfers from the EU budget.
Public debt rises 37% y/y to EUR 25.6 bn at the end of October
Romania’s total public debt increased by 37% y/y to RON 93.7 bn (EUR 25.6 bn) or 18.6% of the projected full-year GDP compared to 17.5% one year earlier. In EUR terms, the growth was 25% y/y. The stock of debt denominated in local currency, which accounts for most of the domestic public debt, increased above average by 63% y/y to RON 52.9 bn and its share in the total public debt widened to 56.5% from 48% one year earlier. The stock of debt denominated in foreign currency on the opposite increased below average, by 14.8% on average in local currency and 4.6% y/y in EUR terms, and it increased mainly on the back of the EUR 750 mn Eurobond from June.
