Economic Overview - August 2009

9 Septembrie 2009

RAIFFEISEN BANK S.A.

 

Highlights

• In Q2 2009, real GDP fell by 8.7% from Q2 2008 and by 1.1% from Q1 2009. Both household consumption and investments contracted sharply from last year, by 15% and 25.6% respectively. Purchases of durables goods and investments in machinery and equipments suffered the most over the last three quarters. On the utilization side of GDP, the activity contracted in quarterly terms in all sectors of the economy with the exception of industry which increased for the first time after four quarters of contraction (+4.5% qoq).

 

• Monthly inflation rate was slightly negative in July (-0.07% mom). As a result, the annual rate of inflation fell from 5.86% yoy in June to 5.1% yoy in July. Decrease in the consumer prices was supported in some extent by the cut by 5% of the tariffs for natural gas.

 

• According to our estimations, foreign trade deficit stood only at 5.6% of GDP in Q2 2009. Also, the current account deficit amounted only to 5.1% of GDP in Q2 2009. Rapid contraction in foreign trade deficit is mainly the result of sharp fall of imports (-36.6% yoy in Jan-Jun) due to the plunge in consumption and investments.

 

• In spite of the gains recorded by the CEE currencies (especially HUF and PLN), the leu exchange rate was stable in August, trading very close to the levels from June and July.

 

• A technical mission from the IMF was in Romania at the beginning of August for the first review of the Stand-by program agreed in March. Following discussions with Romanian authorities, the mission agreed for an increase in the budget deficit target from 4.6% of GDP to 7.3% of GDP. At the end of August, the government revised the budget plan for 2009 in line with the new agreement reached with the IMF mission. The IMF Board is expected to approve the disbursement of the second instalment (EUR 1.9 bn) by the end of September.

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