Rozalia Pal, UniCredit Ţiriac Bank: The economy will grow 1.7% in 2011

The year 2010 has been the low of the economic crisis and has represented a very difficult period, as the economic decline has extended over the last two years, and has affected the living standard, by downsizings in the public sector, and in the private sector alike, says Rozalia Pal, the head-economist of UniCredit Ţiriac Bank.

Among some of the negative elements of the year, Mrs. Pal mentions the fact that the economy continued to drop, and the fact that is has decoupled from the region, as the economies of the neighboring states have continued to recover over the past quarters. "This comes as a result of the pro-cyclical macroeconomic policies of the past years", said Rozalia Pal. On the bright side, the economist said that the aforementioned adjustments can set the economy on the right path on the long term, provided the structural reforms and the modernization and streamlining of the public sector continue. "What"s more, the economic decline has corrected a series of excesses and unsustainable trends that had started appearing before the crisis", Rozalia Pal added.

UniCredit Ţiriac Bank forecasts the economy will resume growth in 2011 (1.7%), given the fact that the harshest austerity measures have already been implemented, and the correction has already occurred. "Two other favorable factors are the support provided by foreign demand and by the slight recovery of local demand", according to the quoted analyst.

Rozalia Pal considers that the evolution of the industry will remain sustainable, but its dynamic depends on a series of factors such as the exports to the Eurozone. Concerning the other sectors of the economy, Mrs. Pal said: "Agriculture will continue to depend heavily on weather conditions, which is why it is hard to tell if it will have a favorable evolution or not. We are expecting a recovery in the services field, strongly influenced by the basis effect determined by the two years of strong drop. In this branch, foreign trade will have a strong contribution, as will the financial sector, which we expect to return to growth in 2011".

The continued collaboration with the IMF and the keeping under control of the budget will remain the main stability factor, Mrs. Pal considers.

The analyst of UniCredit Ţiriac Banc expects a recovery of lending in 2011, with further expansion in 2012, returning to two figure loans. Mrs. Pal said that the growth will be more visible on the mortgage and corporate sector.