Some 150,000 employees will be laid off next year, most of which are currently working in the public sector, said Banca Comerciala Romana (BCR) analysts in a report regarding the evolution of the Romanian economy, Standard.ro reported.
According to the agreement with the International Monetary Fund (IMF), the government must cut budgetary expenditures by 0.66 percent of gross domestic product in 2010, the equivalent of RON 3.5 billion (some 0.82 bln euro).
Following these layoffs, the unemployment rate will rise to nine percent next year, from 7.4 percent at the end of this year. The National Employment Agency (ANOFM) presented a 6.3 percent jobless rate in July, corresponding to 572,562 people. A 1.1 percentage point increase, to 7.4 percent, the unemployment rate estimated by BCR for the end of this year, means an additional 100,000 unemployed by year-end.
Thus, the 150,000 who will lose their jobs next year will join the 670,000 people who are to be unemployed at the end of 2009, totaling 820,000 unemployed in 2010.
Lucian Anghel, Chief Economist of the Banca Comerciala Romana lender, said that the reduction in salary-related expenses in the public sector, mainly due to layoffs, will put "very serious" pressure on the economy, which will affect internal demand and foreign investor confidence.
BCR presented estimates for other economic indicators as well. The GDP forecast for 2009 was revised downward, to an eight percent decline from the previous forecast of 4.9 percent. However, BCR economists expect the economy to pick up in 2010, and rise slightly, by 0.2 percent.
The exchange rate is expected to remain rather stable this year, at an average rate of RON 4.2/1 euro. BCR forecasts a 4.4 percent inflation rate at the end of this year, close to the central bank's current target, of 4.3 percent. Moreover, the lender is hoping that the central bank will further cut the key rate to 7.5 percent by year-end, and six to percent by the end of 2010, from the present 8.5 percent level.