Abstract
As it is becoming increasingly evident the countries of Eastern and Central
Europe have been hit hard by
the current financial crisis. Romania is
hardly an exception in this instance. Shortage of credit, debt and
floating exchange rates characterise the previously fast-growing Romanian
economy. The infrastructure
sector of the country has also been unable to
avoid the crisis. BMI has, therefore, revised its forecasts to
reflect
this changing environment. In BMI’s Romania Infrastructure Report Q209,
we forecast that the
construction sector of Romania will contract by 14.8%
y-o-y in 2009.
It should be noted, though, that there is still a
significant number of new projects. Indeed, the Romanian
government is
focusing its attention on the infrastructure sector. The Romanian Prime
Minister, Emil
Boc, is planning massive public investments in
infrastructure in order to preserve and create jobs. He
considers
infrastructure investment to be ‘the best anti-crisis measure’,
and 20% of the 2009 budget
(EUR10.2bn) has been earmarked for such
investments.
Nevertheless, the sharp fall in the real growth rate of the
construction – and by extension infrastructure –
sector has
inevitably affected Romania’s overall score in our Infrastructure
Business Environment
Ratings. Romania ranks in 11th out of twenty European
countries rated, while it ranks 18th in our Project
Finance Ratings for
Europe.
Our overall view for Romania is vigilant. Despite the
government’s efforts to increase its public
investments, investment
flows in Romania are likely to slow down. Macroeconomic conditions are
bound
to deteriorate. For 2009, we forecast that real GDP growth rate will
fall to 3.1% y-o-y, while we expect
unemployment to rise 4.4%. We forecast
that the economy will begin to recover in 2010, with growth
projected to
average 4.3% through the remainder of our five-year forecast period.
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