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Romania's economic growth may surpass 7% this year

Romania's economy probably will expand more than 7% this year, surpassing previous forecasts, Cristian Popa, deputy central bank governor said.

„There is a resumption of fast growth,” Popa said yesterday at a Euromoney conference in Dubrovnik, Croatia. „It now looks like it is going to be over 7% for this year and could likely continue to be fairly fast in 2007.” The economy grew 4.1% in 2005, 8.4% a year earlier and was forecast to expand 6% this year. Romania's economy is heading for its seventh year of growth, helped by expectations it will join the European Union on January 1 together with neighboring Bulgaria, and rising consumer spending. The country will attract more than €8 billion in foreign direct investments this year, up from €5.2 billion in 2005, according to government forecasts. „It is good in that it is not just consumption-led” growth „as was the case in the past,” Popa said, adding there is a resumption in the growth of investment. Expectations that foreign direct investment will translate into productivity gains and output increases two to three years later are starting to prove correct, he said. Popa cited an increase of about 7% in industrial output in the first six months. „However, there still is a lot of growth in consumption and we find that unsustainable,” he said. (Bloomberg)