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Country Risk Service Romania Updater

  • ID: 2101378
  • Country Profile
  • February 2017
  • Region: Romania
  • 21 Pages
  • The Economist Intelligence Unit
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The negative effect of tax cuts and increases in wages and pensions on the 2016 budget may be offset by strong GDP growth, improved tax collection and better absorption of EU funds. However, The Economist Intelligence Unit forecasts a widening of the budget deficit to 3.3% (ESA 2010 measure) in 2017, putting Romania in breach of EU fiscal rules. Fiscal tightening will not begin until 2018.

On average the leu depreciated in nominal terms by 1% against the euro and by 1.3% against the US dollar in 2016, resulting in a real effective depreciation (measured against a trade-weighted currency basket) of 1.4%. The real exchange rate may be slightly undervalued, and we expect the leu to appreciate modestly in real terms in 2017-18. There is a risk that continued strong nominal wage growth could undermine competitiveness.

The ratio of non-performing loans to total loans has declined sharply, from 21.9% in December 2013 to 10% at end-September 2016, and is expected to fall further in 2017, aiding new lending. Local subsidiaries of Greek banks account for 12% of banking assets, but have strong capital-adequacy ratios to protect depositors.
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Country Risk Service Romania Updater

Risk assessment
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk

Definitions
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Overall country risk

Central scenario for 2017-21: Political stability

Central scenario for 2017-21: Election watch

Central scenario for 2017-21: International relations

Central scenario for 2017-21: Policy trends

Central scenario for 2017-21: Fiscal policy

Central scenario for 2017-21: Monetary policy

Central scenario for 2017-21: Economic growth

Central scenario for 2017-21: Inflation

Central scenario for 2017-21: Exchange rates

Central scenario for 2017-21: External sector

Key risk indicators

Ratings summary

Quarterly indicators

International assumptions summary

Economic structure

Public finances

Exchange rates, interest rates and prices

Financial sector

Current account

International liquidity

Foreign payment and liquidity indicators

External trade

External financing requirement

External debt stock

External debt service
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