ROMANIA: GDP Growth at 6% in 2005, Inflation at 8%

Romania is set to register in 2005 the biggest annual economic growth from among all Central and Eastern European countries, but also the highest inflation rate, according to a UniCredit survey, "ACT Media News Agency' reports. Country's GDP over 2005-2007 is expected to grow by 10 billion euros annually, reaching 96.138 billion euros,in 2007 .

According to UniCredit's macroeconomics research team, Romania will achieve this year an economic annual growth rate of 6 percent, greater than those estimated for Bulgaria (5 percent), the Czech Republic (4.2 percent), Hungary (3.3 percent) and Poland (4.1 percent). For Romania the report shows that while GDP will go up by 5.7% per year, industrial production will record average rates slightly lower, some 4.6% in 2006 and 4.9% in 2007.

At the same time, the year-end inflation rate will place Poland first with 1.9 percent, followed by the Czech Republic (2.5 percent), Hungary (3.3 percent), Bulgaria (5.5 percent) and Romania at the bottom of the list with an estimated level of about 8 percent. The prognosis drawn up by Unicredit indicates also a progressive reduction in inflation, from some 8% in 2005 to some 5.5% in two years' time. The situation regarding the interest rates looks almost similar: the greatest interest rate is predicted for Romania, 7.6 percent year-end, as compared to the Czech Republic (1.75 percent) and Bulgaria (2.05 percent). As for the fiscal ranking of the states in the region, Romania and Bulgaria' prognosis is better than for their neighbouring countries - the Czech Republic, Hungary and Poland.

Therefore, while Romania's consolidated budget deficit will amount to about 0.9 percent of the Gross Domestic Product (GDP) and Bulgaria will end 2005 with a budgetary surplus of 1 percent of GDP, Poland, the Czech Republic and Hungary will post budget deficits between 4.5 and 5.5 percent of GDP, the source concludes. Romania's current account deficit will experience the some period a descending trend to 6.6%, but unemployment will slightly go up each year: 6.1% in 2005, 6.2% in 2006 and 6.3% in 2007. Moreover, direct foreign investments will represent an average of 4.7% of GDP, but the country's foreign debt will maintain its share around 28.4% - 28.5%.

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