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Romania back in recession, growth to resume in H2

Romania officially entered recession today, following the figures published by the National Statistics Institute (NSI) that show a decrease of the GDP for two consecutive quarters (Q).

According to the NSI, the economy contracted by 0.2 percent in Q4 2011 and by 0.1 percent in Q1 2012.

Despite the slight decrease of the GDP, the Central Bank and the Finance Ministry assures that Romania is not sinking in recession and growth will resume as of the second half of the year (H1).

The early estimates made by the Prognosis Commission point to an economic growth of 1.7 percent at the end of 2012, the GDP being estimated at some 609.6 billion Euros.

Recently the International Monetary Fund (IMF) revised downward the initial economic growth forecasts, from 1.8 percent to 1.5 percent .

"Our take on the Romanian economy didn’t change in the past three months. We are expecting a positive growth in 2012, of 1.5 percent of the GDP and even more in 2013 (…) 1.5 percent is not much but it is significantly above the European average, as the eurozone is currently in recession. Under these circumstances, it is an acceptable achievement", IMF’ representative for Romania Jeffrey Francks said earlier this month.

Meanwhile, the national currency, the RON continues to sink, reaching today a new record low against the common European currency, 4.44 RON/ 1 Euro.

Compared to other currencies in the region, the RON had a rather stable evolution. The RON lost 2.8 per cent against the euro since the end of 2011.

However, the formal entry in recession might add more pressure on the national currency, with analysts forecasting an exchange rate of 4.5 RON/ 1 Euro in H2.

According to analysts, the depreciation trend is a consequence of the instability in Greece and also of the deterioration of the fiscal positions caused by austerity in the whole of Europe.

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