Market Research Logo

Romania Country Risk Report Q4 2018

Romania Country Risk Report Q4 2018

Key View:

Despite real GDP growth peaking in 2017, Romania's economy will remain one of Emerging Europe's outperformers in the years ahead, suggesting the country will make further progress on its EU convergence story. Growth will be relatively broad-based, with private consumption, exports and investment all performing well.

However, loose monetary and fiscal policies have contributed to the strong economic performance of late, and with inflationary pressures building and the trade deficit rapidly widening, risks of overheating are mounting. We believe the National Bank of Romania will be forced to tighten policy fairly aggressively starting in late 2018. More gradual tightening will follow in 2019.

The PSD-ALDE coalition government will face broad uncertainty and weaker stability in the years ahead on the back of its focus on the implementation of a relatively controversial judicial reform and fiscal trajectory.

The government will come under increasing pressure to reverse its loose fiscal policy, given the rapid increase in its fiscal deficit.

While we do not project a major deterioration in the near term, owing to a low starting level of public debt and relatively low borrowing costs, the current trajectory poses mounting challenges for the longer term and alongside a rapidly deteriorating external position, will restrict future flexibility in responding to unexpected shocks.

Major Forecast Changes

We have revised down our forecasts for real GDP growth in 2018 to from 4.4% to 4.2%.

Key Risks

Persistent political uncertainty and instability may weigh on Romania's long-term growth outlook.

The government's pro-cyclical fiscal loosening and unpredictable short- and medium-term budget strategy pose threats to the country's creditworthiness.

Romania's external dynamics, namely its widening current account deficit and rising reliance on hot money, expose the country to a higher risk of a sudden capital flight.


Executive Summary
Core Views
Major Forecast Changes
Key Risks
Country Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
Growth To Run Up Against Structural Limits
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
Outlook On External Position
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
Monetary Policy
Central Bank Shifts To Dovish Tone, But Risks Remain Prominent
Monetary Policy Framework
TABLE: MONETARY POLICY FORECASTS
Fiscal Policy And Public Debt Outlook
Limited Scope For Fiscal Manoeuvres To Avert Economic Slowdown
Structural Fiscal Position
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
Romania Country Risk Q4 2018ContentsCurrency Forecast
RON: Weakness In The Short And Long Term
10-Year Forecast
The Romanian Economy To 2027
Major Untapped Growth Potential
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Political Outlook
Domestic Politics
Romania A New Headache For The EU
TABLE: POLITICAL OVERVIEW
Long-Term Political Outlook
Progress Ahead Amid Geopolitical Uncertainty
Global Macro Outlook
Strong Growth, But Greater Headwinds Too
TABLE: GLOBAL MACROECONOMIC FORECASTS
TABLE: DEVELOPED STATES, REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS, REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: ROMANIA – MACROECONOMIC DATA & FORECASTS

Download our eBook: How to Succeed Using Market Research

Learn how to effectively navigate the market research process to help guide your organization on the journey to success.

Download eBook

Share this report