Romania's economy is still ticking along. It grew in the first quarter at a rate of about 5.3% (annualized). This means that Romania is heading into a fourth year of respectable growth. Inflation is falling -- still high, but falling. It was 14% last year, is presently around 12%, and is expected to fall to 9% by the end of 2004. (The National Bank has been talking very, very tough about this.) Foreign investment is growing quickly, although from a very small base. Lending is growing like mad, around 50% per year.
The biggest flea on the dog is the foreign trade deficit, which is just getting bigger and bigger. I blogged about this a few months back. Not much has changed since then, except that the numbers have continued to edge upwards. Romanian exports are up, but imports are up even more. Oddly enough, this has not led to downward pressure on the leu... yet. In fact, the leu has strengthened by about 3% against the euro since the beginning of this year. But a developing country can't run a big trade deficit forever. So, unless corrected, this is going to cause problems at some point. Still, overall it's good news for Romania. Which is also good news for the ruling Social Democratic Party, the PSD. PSD faces local elections next month and then national elections in November. At this point they're expected to coast to a win... though, of course, November is a long way away. One oddity: after three, now going on four years of good economic news, Romanians seem as pessimistic as ever. Am I missing something? Anyone?