Romanian economy in the grip of an economic Dracula.

Romania may be in the grip of an economic Dracula, that is sucking out the blood from it, and leading to its painful demise, as it were.

According to the country’s Finance Minister, the economy is likely to contract by 8.4% to 8.5% in 2009. This matches up with the forecasts of the IMF that has extended an economic lifeline to the country. However, if things do not improve fast, this lifeline could end up as a noose around Romania’s neck.

Among the problems that Romania is now facing is a possible sovereign bankrupty, for want of funds to run the state and its institutions. Whichever facet of the economy one looks at, reveals a negative factor. Unemployment is rising by the day. Stock values are falling without a check. Investors are bleeding non-stop. Public debt is mounting without an end in sight. Trade deficit is on the rise. The real estate sector is reeling from the effects of the economic mess. Businesses are folding up and even the Banking industry is yelling for help from the Government.

In the scenario obtaining in Romania today, it was inevitable that IMF enter the scene, with all its conditions to bail out the economy, with a generous dose of money. But the fact is that, the major part of this money is going into shoring up the national currency that has been battered in the market, and the financing of the trade deficit. As Romania gets deeper into economic trouble, the IMF gets a tighter hold over its economy and system, enabling it to dictate terms that are likely to cause hardship to common Romanians, without a correspondingly beneficial fallout of these measures, as history has shown.

Only time will tell how this unfolding crisis is going to pan out in Romania, and how it is going to affect the rest of the world.