Stable economic prospects

stable economic prospects Standard & Poor's reconfirms the stable outlook rating for Romania

The Standard & Poor's (S&P) financial rating agency has reconfirmed the rating related to Romania's government debt to BBB-/A-3 for the long and short term debt in local and hard currency as well as the stable outlook. Also S&P estimates that Romania's economy will slow down even more this year, to stand at 3.5%, due to a more reduced external demand and a lower level of private investments. According to the agency, last year the growth rate of the GDP dropped down to 4.1% from the very high level of 7% reported in 2017, when the fiscal stimulation measures and the favourable external environment prompted Romania's economic boom. For the period 2020-2022, S&P expects a moderate growth towards a more sustainable level of 3% annually. The future growth trajectory will depend on the progress made in passing institutional reforms and on the rate of success of increased domestic investments, for instance by means of boosting the absorption of European funds, S&P also shows. In another move, S&P remarks an obvious propensity for immigration among young people, among the educated labour force as well as a gloomy prospect on the improvement of general life conditions. S&P warns that if the authorities don't take action to bring the people in the Diaspora back home, they will not be able to ensure a more robust growth trajectory for the economy and a sustainable way of managing the dynamics of the population's rapid aging.


The agency also draws attention to the increasing fiscal pressure that will linger in the absence of corrective measures. The current account deficit will probably grow at almost 5% of the GDP, S&P writes. The national bank of Romania still enjoys a high credibility rate and the awaited amendments to the new banking tax will probably ensure the policies' efficiency. S&P estimates that the general governmental deficit will deepen, going up to 3.3% to 3.5% of the GDP in 2019 and 2020 respectively, as a result of a slowdown in economic growth and of government expenses, and against the backdrop of preparations for the 2019 presidential election and the 2020 parliamentary elections. S&P's decision to maintain the stable outlook for Romania is a fair one, which acknowledges and confirms the current economic realities of Romania, says Finance Minister Eugen Teodorovici. According to the finance ministry officials, Romania's strengths underlying the S&P decision are the moderate level of public and foreign debt and the effort to maintain the economic growth prospects. The 2019 budget law passed by the Romanian government and promulgated by president Klaus Iohannis is based on an economic growth of 5.5%, a 2.7% deficit and a GDP of almost 200 billion Euros.



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Publicat: 2019-03-18 13:46:00
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