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IMF to downgrade forecasts on Romania's economic contraction

International Monetary Fund will downgrade its forecasts on Romania’s economic contraction in 2009, from -4.1% agreed in March, after sharper-than-expected deterioration of the economy, said Tonny Lybeck, head of IMF’s mission in Romania and Bulgaria. “At the end of our mission, when more economic data are available, we will be able to make more accurate projections and estimations for the remainder of the year”. “The forecasts will stand below the March’s 4.1%, due to a sharper deterioration of Romania’s economy”, said Lybeck. However, he refused to make public an exact figure, and added that at the end of IMF’s mission in August 10, the institution would release the final data on the economic outlook on Romania.
Pogea sees a 7.1% contraction of Romanian economy
Minister of Finance, Gheorghe Pogea said Romanian economy could contract this year by as much as 6.5-7.1%, above the level assumed by the government at its budget revision, of 4%. “For the moment, there are no data available on economic contraction in first half. The economic growth will surely be in the negative territory. At year-end, the drop could be in the range of 6.5-7.1%”, said Pogea. The prediction made by the minister of finance is the most pessimistic estimation ever made public by a member of the government.Earlier, president Traian Basescu said at Prague that the economic growth would not turn positive in the second quarter, but expressed his hope that the economic performance would improve in the third quarter.At the time Romania signed the financing agreement with IMF, the government took over the fund’s macroeconomic projections, which set the country’s GDP contraction at 4% in 2009.The 6.2% YoY economic slowdown in first quarter topped market and IMF’s expectations. Subsequently, the International Monetary Fund said the institution was very likely to revise its current projections.