SAR Report 2011: Forecast 2011 Surely no news is good news? Less uncertainty, macro stabilization, growth and optimism at low levels


Accounting for 2010

2010 was such a nightmare for forecasters and economic observers of Romania, due to many unexpected developments and policy turnarounds, that few experts escaped with their honor intact. Looking one year back, it turns out that SAR, too, managed to forecast with decent accuracy some economic indicators, while other developments confounded our analysis. On the budget deficit, which was 6.58% of GDP at the end of the year, we hit closer to the target than the mighty IMF: 6.1% versus 5.9%. Similarly, our panelists did a better job on inflation (7.9% in reality, 4.2% our prediction) than the European Commission and the IMF (3.5%), although most anticipations turned out to be way off the mark on this indicator, derailed in mid-year by the VAT rise.

We were much more precise in our estimates for unemployment (we said 8.4%; it was 8.2%) than the Government (7.7%) or the European Commission’s (8.7%); and for the Leu’s exchange rate (4.1 against the

Euro, we said; 4.21 confirmed by BNR), against some gloomy predictions that saw a substantial devaluation. Real estate prices (around -10%), which in Romania are notoriously difficult not only to predict, but even to measure, fell within our margin of error (+/- 15%).

Everybody failed to see the economic contraction that Romania was about to face; SAR made no exception. Last year we predicted an economic growth of 1.2% when in fact the outcome was a contraction of -1.9%. Yet again, our stand in comparison to others is not bad: the IMF saw an economic growth of 1.3% in February 2010; the Economist Intelligence Unit predicted 1% GDP growth. Here the Romanian government was, surprisingly, the most realistic of all, basing its 2010 budget on a modest 0.5% growth. In any case, nobody thought 2010 would see an overall decrease, and the negative forecasts started to appear only after the first half of 2010.

Read more about our findings here.

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