Romania remains sluggish in reforming labor market and business environment, IMF says

Romania made little progresses last year in structural reforms, especially in regulating the labor market and business environment which are very important for the economy's sustainable growth, representative of the International Monetary Fund (IMF), Albert Jaeger said.

Romania lags behind other countries in the European Union in this respect. As far as the macroeconomic evolution is concerned, IMF fears possible widening of the macroeconomic gaps and spreading of the international financial turmoil.

IMF says Romania could be hit by the financial turmoil in two ways. First, Romania could face difficulties in terms of external financing which became more expensive therefore less accessible. Second, its economic growth could be affected, too. However, demand for Romanian commodities had a positive evolution last year despite the fact Romania's trade partners had a slower growth pace, Jaeger said.

IMF representatives deem Romania's current account gap reached an unsustainable level last year and it must be narrowed.

The current account deficit widened 66.1 percent last year to 16.9 billion euros, representing 13.9 percent of the gross domestic product (GDP).

Nevertheless, IMF estimates Romania's economy would hike 6 percent this year then temper to 4.7 percent in 2009. IMF also warned the tempering of the economic growth in 2009 could be deeper but it depends on the evolution of external factors and on the country's economic policies. However, looking on the bright side, this would help disinflation, IMF added.

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