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Unicredit reviews scenarios on Romania economy

09. July 2010. | 12:13

Source: Hotnews.ro

The latest scenario considers a negative impact of the VAT increase over consumption and indirectly on investments, with effects expected to be visible in the second half of 2010.

Unicredit has reviewed its forecast scenarios on the Romanian economy.

The latest scenario considers a negative impact of the VAT increase over consumption and indirectly on investments, with effects expected to be visible in the second half of 2010.

Low domestic demand will contribute to a GDP contraction by 2.5% this year as compared to the previous forecast of a 0.9% contraction, an Unicredit report reads.

According to the document, inflation is expected to grow due to a VAT increase of 5 percentage points and to peak at over 8% in August. For end of year, the forecast is of a 7.7% inflation, followed by a drop to 4% by end of 2011.

The report expects the Romanian National Bank would keep the monetary policy interest at 6.25% until end of year.

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