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Thursday, October 28, 2004

REGION: EU Forecasts Candidate Countries' Deficits Under Control, Growth Sustainable

Source: seeurope.net
EU candidate countries Romania and Bulgaria will continue to post moderate government deficits over the next two years, while Croatia and Turkey are forecast to improve their public finances, the European Commission said. All four will record sustainable growth this year, next, and in 2006, the commission said in its autumn economic forecasts. 'In Romania and even more so in Bulgaria, general government deficits are projected to remain quite moderate,' it said. 'In Croatia and particularly in Turkey, where deficits are presently at higher levels, government deficits are expected to narrow further.' Both Romania and Bulgaria will be within the 3 pct of GDP deficit limit set under the EU's stability and growth pact. Romania's government deficit is expected to rise slightly to 1.7 pct of GDP in 2005 from 1.6 pct this year and to reach 2.2 pct in 2006. Bulgaria's deficit is seen at just 1.0 pct in 2005 compared with a projected surplus of 0.5 pct in 2004. In 2006, the budget balance is expected to be at zero. In Croatia, the budget deficit is expected to amount to 3.9 pct in 2005, down from 4.5 pct this year, and to fall to 3.6 pct during 2006. The commission said cost savings from reforms of the health sector and public administration will result a narrower deficit in 2005. Turkey's deficit for 2005 is expected to fall to 5.7 pct from a projected 7.2 pct this year, and then to decline to 5.0 pct in 2006. 'Continued fiscal discipline and declining financing costs will be key in this respect,' said the commission. Rising labour productivity and an increase in efficiency of capital stock will provide a basis for the continued expansion of GDP in the candidate countries. Growth will also be boosted by private consumption and investment, it said. Bulgaria's GDP growth rate for 2004 is expected to amount to 5.5 pct, rising to 6.0 pct in 2005 and falling off slightly to 4.5 pct in 2006. Croatia meanwhile is expected to record growth of 3.8 pct this year, 4.0 pct next year and 4.5 pct in 2006. In Romania and Turkey, the growth rates for this year will be exceptionally high but will be followed by some deceleration in 2005 and 2006. In Romania, 2004 growth is seen at 7.2 pct. In 2005, this is expected to tail off to 5.6 pct and then in 2006 to 5.1 pct. Turkey's growth rate will be 8.5 pct this year, according to the commission's forecasts. In 2005, growth is expected to amount to 5 pct and then in 2006 to 5.3 pct.

Posted by Mircea : 10/28/2004 01:54:00 pm