ECONOMY

Romania to miss CPI target

BUCHAREST (Reuters) – Romania’s stubbornly high inflation is not likely to drop to its 9 percent target for this year and the country may also miss its 5.5 percent growth goal, a Reuters poll of analysts showed yesterday. The median estimate of the 15 analysts polled put inflation at 10.6 percent this year and economic growth at 4.8 percent. Analysts said cutting inflation, which they estimate at 14.4 percent for 2003, would require limiting wage rises and pressing on with unpopular layoffs to raise productivity during an election year. «Aggregate consumption should be reduced for the inflation target to be reached,» ABN Amro senior analyst Radu Craciun said. «The government is between a rock and a hard place.» Efforts to cut state-owned companies’ debts and losses, estimated at around 3 percent of gross domestic product, make the inflation target even harder to reach, analysts said. Electricity prices were hiked by around 8 percent at the beginning of the year, while gas tariffs will rise by 4 percent each quarter. Heating for individuals went up by 12 percent, to contain losses in the debt-ridden energy sector. Food prices are also expected to rise, at least until 2004 crops arrive, because last year’s drought-hit wheat crop fell to 2.42 million tons from 4.4 million tons in 2002, analysts said. Poor agricultural output made the government revise the 2003 economic growth target to 4.8 percent from an initial 5.2 percent and analysts said they now expect another downward revision in the growth forecast for this year. The central bank said it would impose stricter rules on consumer credit, which rose 300 percent in the first 10 months of last year, pushing the current account gap to around 6.5 percent of GDP. Romania’s trade deficit, the key figure in the current account, ballooned to $3.352 billion in the first 10 months of the year, with imports growing by around 33.8 percent and exports by 28.3 percent.