Bloomberg News

Romanian Economy Returns to Recession in First Quarter on Crisis

May 15, 2012

Romania slipped back into a recession in the first quarter as the European sovereign-debt crisis and freezing temperatures slowed growth in exports and industrial output.

Gross domestic product shrank a seasonally adjusted 0.1 percent from the previous quarter, after contracting 0.2 percent in the fourth quarter, the National Statistics Office in Bucharest said today in an e-mailed flash estimate. GDP grew a seasonally unadjusted 0.3 percent from a year earlier, below the median estimate of 0.8 percent in a Bloomberg survey of nine economists.

Romania’s economy has fallen into a second recession in four years, after exiting its worst decline on record last year, as European austerity measures aiming to cool the sovereign-debt crisis slowed exports from the eastern European country, home to Dacia SA cars. Freezing temperatures and heavy snowfall also disrupted transportation and supply chains.

“The second-quarter data will be crucial in shedding light on whether the observed softening in economic activity is largely driven by temporary factors such as harsh winter conditions,” Citigroup Inc. economists Ilker Domac and Gultekin Isiklar wrote in a note to clients before the report.

The country will probably see growth slowing this year to 1.5 percent from 2.5 percent in 2011 as European spending cuts hinder export growth, according to International Monetary Fund forecasts. The economy will probably grow 1.4 percent this year, the European Commission said in its spring forecast published on May 11.

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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