Romania Country Risk Report Q4 2020

Romania Country Risk Report Q4 2020

After contracting in 2020 amid the Covid-19 pandemic, Romanian economy will experience gradual recovery.

Loose monetary and fiscal policies have contributed to the recent strong economic performance, but with the trade deficit rapidly widening, risks to macroeco-nomic stability have increased.

Meanwhile, political uncertainty has increased amid the upcoming parliamentary elections.

The current fiscal trajectory poses mounting challenges for both short- and long-term fiscal outlook.

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 long-term fiscal sus-tainability.

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
Key Risks
Country Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
Slow Romanian Economic Recovery In H220 As Covid-19 Cases Increase
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
External Trade And Investment Outlook
Romania's Current Account Deficit To Narrow But Risks Remain
Outlook On External Position
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
Monetary Policy
Further Monetary Easing To Come In Romania Following August Rate Cut
Monetary Policy Framework
TABLE: MONETARY POLICY FORECASTS
Fiscal Policy And Public Debt Outlook
Political Landscape Makes Fiscal Consolidation Unlikely In Romania
Structural Fiscal Position
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
Currency Forecast
Romania's Twin Deficits And Dovish Monetary Policy Will Weigh On Leu
TABLE: FITCH SOLUTIONS CURRENCY FORECAST
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings’ Credit Ratings. Any comments or data included in the report are solely derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.Romania Country Risk Q4 2020Contents10-Year Forecast
The Romanian Economy To 2029
Major Untapped Growth Potential
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Political Outlook
Domestic Politics
Political Risks In Romania Increase Amid Rising Covid-19 Cases
Long-Term Political Outlook
Political Challenges Pose Key Risks To Growth And Stability
Operational Risk
TABLE: OPERATIONAL RISK
Labour Costs
TABLE: LABOUR REGULATIONS GOVERNING FLEXIBILITY OF WORKFORCE
Legal Environment
TABLE: BUREAUCRATIC PROCEDURES
Global Macro Outlook
Recovery Taking Shape, But Headwinds Remain
TABLE: GLOBAL MACROECONOMIC FORECASTS (2019-2024)
TABLE: DEVELOPED MARKETS – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: ROMANIA – MACROECONOMIC DATA AND FORECASTS

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