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GEA's Liviu Voinea: Double-digit plunge for Romanian economy in 2009

Romania cannot avoid a double-digit economic recession, even if the National Projection Commission (CNP) 'battles' the economic setback inclusively by forging higher than real growth rates, executive director of the Group for Applied Economics (GEA) Liviu Voinea on Monday told the public radio station.

'We cannot bypass a double-digit recession. Just think mathematically: in Q3 2008, growth has been 9 percent. A stagnation in Q3 this year would actually mean a plunge of minus 9 percent from last year. But a decrease of minus 7 - 8 percent compared with plus 9 percent last year actually signifies a double-digit recession,' said Liviu Voinea, quoted by Agerpres..

The cited expert also considers that inflation is artificially held in check, as he correlates INS reports, which he considers to be unrealistic, with CNP forecasts. 'Why certainly, just as the Romanian Statistics Institute (INS) is the only body in Romania to effectively fight inflation, because it reports smaller inflation rates, the Projection Commission too fights recession by forcing higher than real economic growth rates,' Voinea said.

'I do not believe that the 12-month economic decline will be just 7.7 percent, as has been recently said,' warned the GEA executive director. He believes that recession will be steepest for July, August and September. 'Recession will hit bottom in Q3, because last year it also peaked in Q3. In my opinion we will experience a double-digit recession,' said Voinea.
Liviu Voinea: Political crisis to increase country risk and costs of foreign loans
The political crisis is likely to deepen the country risk and the costs of the loans accessed by Romania, said, on Monday, Liviu Voinea, executive director of the Group of Applied Economics, during a public radio broadcast.'Unfortunately, Romania has now come to live from loans, and I think of the state more than of the private companies. But for both, the political crisis will lead to an increase in the costs of loans, notably of those in hard currency, ' said Voinea.

The economic crisis is far from having ended in Romania, and the measures taken so far have a strictly monetary component, they are making the crisis sustainable financially, it tries to finance the deficits, Voinea continued. According to him, this are not measures that can take us out of the crisis, to lay the foundations of economic growth. We are waiting that the return of the economic growth take us out of the crisis, and the political instability will stress the country risk and will increase the costs of the loans accessed by Romania.



Tuesday, September 29, 2009