Romania’s Econ Growth Seen Robust, Inflation Still A Risk - ICEG

Romania’s economic growth is seen robust on short term but domestic demand will remain the main engine of growth in the upcoming period, raising risks of economy overheating and a sharper slowdown in the medium term, the International Center for Economic Growth, ICEG said in a report.

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“We expect domestic demand to remain the main engine of growth in 2008, while a slight recovery of the export sector is also anticipated in the course of the year. For 2008 we expect a growth rate of 7.2%,” the reports shows.

For this year, analysts forecast an economic growth of 7.2%, and 6.5% for 2009.

“Risks are broadly balanced in the short term: on the downside, a slowing European economy can drag down exports; on the upside, rapid wage growth can boost private consumption further. However, such an overheating can result in a sharper slowdown in the medium term,” the report shows.

ICEG also said inflation remains a major macroeconomic challenge in Romania, showing the harmonized index of consumer prices went down to 3-4% in the first half of 2007 it increased to 6.6% by December and exceeded 8% in February 2008.

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