The decline of Romania's economy in the first quarter of 2009 was sharper than International Monetary Fund (IMF) officials had expected. Initial estimates by the fund of a 4.1 percent shrinkage in gross domestic product (GDP) could be revised downwards in August-September, following an analysis by an IMF mission of the country's macroeconomic framework, according to the head of the IMF mission to Bucharest, Jeffrey Franks.

"Although we had a sharper GDP contraction than expected in Q1, I am afraid that Romania's economy has not yet hit bottom. In the coming two-three quarters, the economy will keep dropping, perhaps at a more moderate pace, but the GDP contraction will be sharper in Q2 and Q3 than it was in Q1. Romania will have a U-shaped rebound," he said. IMF calculates GDP on a quarterly basis. However, the Governor of the National Bank of Romania (BNR), Mugur Isarescu, recently said that the low point was already reached in the first quarter of 2009.

"I still believe that we are having a V-shaped recession, and I think that the low point was reached in the first quarter," he said, adding that the economy could bounce back as of the second quarter. "My hope is that we will have growth by the end of the year," Isarescu added. However, IMF's Franks estimates that the economy will only show signs of recovery by the end of 2009 and early next year.

Romania signed an agreement with the IMF, the European Union and other international lenders for a €20 billion stand-by loan.

Source: Standard.ro