Economic Overview - December 2010

19 Ianuarie 2011

RAIFFEISEN BANK S.A.

 

Highlights

On 7 January, the IMF Board approved the disbursement of the seventh instalment (EUR 904 mn) from the external financing package agreed in 2009 after Romania successfully fulfilled the prior actions agreed during the last visit of the IMF team (enactment of the new pension law, approval of the new law on a unitary wage scheme in the public sector, and of the budget plan for 2011, and amending ordinance on credit contracts).

Finance Ministry's officials said preliminary data show that consolidated budget deficit stood at around 6.6% of GDP in 2010, slightly below the 6.8% of  GDP target agreed with the IMF.

In real sector, the status quo maintains. Most recent data (November 2010) showed that upward trend remained intact in industry. At the same time,  construction and retail sales remained on a downward trend. Given these circumstances, we consider that a quarterly GDP growth rate close to 0% is the most likely scenario for Q4 2010.

Monthly inflation rate came in at 0.53% mom in December, in line with market expectations. The level was similar to one recorded in the previous 3 months. As a result, the annual rate of inflation climbed to 8% yoy from 7.7% yoy in November. Annual inflation rate will fell to around 6.7% yoy in January due to a statistical base effect and would remain on a sharp downward trend in 2011.

Central bank remained on hold at the last monetary policy meeting on 5 January, keeping the monetary policy rate unchanged at 6.25%. However, interbank interest rates fell further and continue to be substantially below the level of the monetary policy rate.

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