The annual inflation in Romania slowed down in January at 6.9% from 8% in December, and the monthly one was 0.6% according to the estimates of 16 analysts. The analysts anticipate that inflation got on a descending trend, supported by the basic effects and the effects of the second round which are limited, after the increase,last year of the VAT by 5%.

Although the inflation is expected to slow down significantly in the second half of the year, once the slowing down of the impact of VAT increases, the pressure made by the increase of prices for food at global level will continue.

IMF announced on Tuesday that inflation in Romania reached highest level. BNR estimates for the end of this year an inflation of 3.6% under the estimates of analysts, of 4.3%. The BNR governor Mugur Isarescu said, on Monday that the bank anticipates the resumption of the disinflationist process in the first quarter, for January the estimate being an inflation under 7%. The leu kept in January at a constant level of 4.25-4.27 units per one euro.

The analysts estimate that GDP contracted in the fourth quarter by 1.5% in annual terms and with 0.3% against the previous three months. As a whole for 2010, the analysts expect a decline of the GDP of 2%. For 2011, the analysts estimate a modest advance of GDP of 0.8% under the rhythm of 1.5% assumed by the IMF.

Romania convened with IMF and the EC a new agreement worth five billion euro, for a period of two years, and will access funds only if needed. President Traian Basescu stated, on Sunday night, that the new agreement of Romania with international organisms will be adopted in March and will come into power in April. The government must continue the austerity measures to reduce the budgetary deficit at 4.4% out of the GDP this year, from 6.5% last year, Reuters says.

According to the dealers, the leu will have a limited reaction to the data regarding inflation and GDP evolution, as the market expects the slowing down of price increase and economic contraction.
A surprising evolution of the two indicators will influence the market, but the effect will not modify significantly the perspective on a long term of the currency, which will be appreciated at 4.2 units per euro before the end of this year, according to the analysts.