Romania slashes 2012 growth forecast to 0.7%

(BUCHAREST) - Romania's economic forecast commission (CNP) slashed Monday its 2012 growth estimate to 0.7 percent from 1.7 percent.

The Balkan country's budget was based on a 2.1 percent growth forecast but the figure has been repeatedly trimmed due to a slower than anticipated exit from recession.

The International Monetary Fund (IMF) and the European Union had already in August lowered their forecast, from 1.5 to 0.9 percent.

They said the cut was due to spillover from the eurozone crisis, and on the serious domestic political crisis sparked by the ruling coalition's move to impeach president Traian Basescu, as well as a drought.

Romania's economy grew by 0.4 percent over the first three quarters of 2012.

For 2013, both the economic forecast commission (CNP) and the IMF forecast 2.0 percent growth.

The CNP's report also showed agricultural output is expected to drop by a dramatic 15 percent in 2012, after posting a record 13.5 percent expansion in 2011.

Industrial output is expected to go up by 0.4 percent, construction by 2.2 percent and services by 1.7 percent.

In May 2009, crisis-hit Romania obtained a 20-billion-euro ($24.7-billion) rescue package from the IMF, the European Union and the World Bank in exchange for sharp spending cuts.

In March 2011, the IMF and the EU agreed to provide a fresh credit line of 5.0 billion euros, to be drawn upon only in case of emergency.