Country Report Romania April 2009

Summary

The government, comprising the Democratic Liberal Party (DLP) and the Social Democratic Party (SDP), has a large majority, which should enable the cabinet to pursue its agenda unimpeded by the parliamentary opposition.
The potential for intra-government conflict is great, given likely differences between the DLP and the SDP over economic policy and judicialreform.
The government's pursuit of fiscal retrenchment under an IMF-funded programme will bring it into opposition with the unions, and there is a risk of widespread social unrest, as austerity bites and unemployment grows.
The IMF has agreed a revised consolidated budget deficit target of 4.6% of GDP in 2009 (compared with 2% of GDP previously), based on a much bleaker assumptions about economic growth and revenue intake in 2009.
Following real GDP growth of 7.1% in 2008, the Economist Intelligence Unit forecasts an economic contraction of 1.8% in 2009. A rebound, to growth of 2.3%, is forecast in 2010.
Average consumer price inflation is forecast to fall gradually, from 7.8% in 2008 to 5.8% in 2009, and to 4.7% in 2010.
After reaching an estimated 12.4% of GDP in 2008, the current-account deficit is expected to contract sharply in 2009-10.

The opposition National Liberal Party (NLP) elected a new leader at an extraordinary party congress in March, perhaps presaging party political realignments at a future date.
Senior officials at the Ministry of Interior and Administration were arrested on anti-corruption charges in March and will face trial.
The government negotiated a 19.5bn (US$27.5bn) credit package with the IMF, the World Bank, the EU and other organisations, the central feature of which is a two-year stand-by agreement with the IMF.
The government will draw up a revised budget in April or May, based on a revised deficit target of 4.6% of GDP, and cuts in expenditure equivalent to 1.1% of GDP.
Data on industrial output, construction, retail trade and new orders for industry in early 2009 provide little evidence of an early economic recovery.
Inflationary pressures have resurfaced in the first quarter of 2009, partly driven by leu depreciation.

Source: Country Report

This report covers the following industry codes:
SIC Code: 70
NAICS Code: 72