Romania Country Report - March, 2017

Romania Country Report Mar17 - March, 2017
The political tensions have further eased through March, but the activity of Romania’s government is still hindered by hardly functional political majority. A conflict within the junior ruling party resulted in the replacement of the deputy-prime minister Daniel Constantin. Politically, Constantin was not a relevant part of the balance within the ruling coalition and his replacement in the government’s structure brings nothing new. But the development show the magnitude of the unrest within the ruling coalition, still led informally by the leader of the Social Democratic Party Liviu Dragnea.

Economically, the fiscal slippage remain the main concern. The government promised to keep the deficit within the 3% of GDP this year, but it goes ahead with a multitude of measures with significant impact on the gap. Eventually, it is not the size of the gap that matters, but the focus of the public spending on public wages,, pensions and social spending at the expense of investments. As a measure of last resort, the government squeezes the state-controlled companies as much as possible, through dividends (even paid in advance) and the recovery of reserves. Transgaz thus has to rely on bank loans for investments after having paid the profit derived last to shareholders (basically, to the state). More clarifications are expected after April 25, when Q1 data will be released and compared to the targets.

1.0 Executive summary
2.0 Politics
2.1 Political tensions ease
2.2 Junior ruling partner replaces deputy PM
3.0 Macro Economy
3.1 Macroeconomic overview
3.2 Macroeconomic outlook
4.0 Real Economy
4.1 Industrial production
4.2  Inflation
4.2.1 CPI dynamics
4.2.2 PPI dynamics
4.3 Construction
4.4 Retail trade, services
4.5 Labour Market
4.5.1 Labour market, unemployment dynamics
4.5.2 Income dynamics
5.0 External Sector & Trade
5.1 Balance of Payments
5.1.1 Current account
5.1.2 Foreign trade
5.1.3 Gross international reserves
5.2 FDI
5.3 Gross External Debt
6.0 Public Sector
6.1 Budget
6.2 Public Debt
7.0 Forex
7.1 Real exchange rate
8.0 Financial & capital markets
8.1 Bank sector
8.1.1 Profit and Loss
8.1.2 Lending
8.1.3 Deposit formation
8.1.4 Credit Quality (NPL)
8.1.5 Bank news
8.2 Central Bank monetary policy
8.3 Stock market
8.3.1  ECM news
8.4 International ratings
9.0 Industrial sectors
9.1 Industry
9.2 Utilities
9.3 Energy
9.4 Transport

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