ACCORDING TO THE EBRD, Romania"s economy to grow 1% in 2010

• Number of bankruptcies and unemployment rate to rise in Central and Eastern Europe next year

Romania"s economy will grow 1% next year, after declining 8% this year, and rising 7.1% in 2008, the European Bank for Reconstruction and Development (EBRD) predicts, in its 2009 transition report scheduled to be published next month.

Peter Sanfey, EBRD economist, states the following: "After years of sustained growth, Romania is faced with a significant economic slowdown, due to declining exports, a contraction in the construction sector and harder access to funding. Nevertheless, the international financial institutions have taken action to help mitigate the impact of the crisis, and Romania"s medium-term outlook remains favorable, with potential to return to growth once global circumstances allow it".

The document states that any 2010 recovery in Central and Eastern European countries is likely to be fragile and inconsistent. The EBRD report shows that there will be significant differences between these countries, with an average growth rate of 2.5% for the region.

• Recession is about to end in several countries

For the economies of Central and Eastern European countries, the EBRD predicts an average rate of decline of 6.3% in 2009, due to the sudden output decline in the first semester. "The signs of positive growth for Q3 2009, suggest that the recession is about to end in several countries in Central and Eastern Europe", the report says.

Erik Berglof, chief-economist of the EBRD, says: "It"s obvious that the social impact of the crisis will become far more powerful next year, when the number of bankruptcies and unemployment rate will continue to rise. It is estimated that in the EBRD region, the average growth rate will be below the last decade"s numbers".

Even though 2010 growth for Central and Eastern Europe is expected to exceed the 1.5% the EBRD forecasted in May, this merely reflects the recovery from a harder than previously expected economic decline, rather than the first signs of a stronger economy in 2010.

According to the report, some of the factors that could hinder 2010 economic growth include the slow rate of increase in exports, (especially in the Euro zone) and the tightening of lending conditions, because banks will gradually reduce their exposure in the region, and lending for individuals and small companies will remain limited, due to the increase in the number of non-performing loans. n