Country Risk Service Romania
The Economist Intelligence Unit, February 2013, Pages: 25
The Social Liberal Union (USL) won a decisive majority in the December 2012 parliamentary elections, putting it in a powerful position to pursue its policy agenda in 2013-16. However, disagreements between its constituent parties could come to the fore later, with negative implications for policy implementation. Presidential opposition could also block USL reforms. Continued opposition from some EU member states will block Romania's Schengen membership. It is not certain that the government will negotiate a new IMF agreement, although we think that this is likely given continued euro zone uncertainties. We forecast real GDP growth of 1% in 2013, reflecting continued recession in the euro zone. Growth is forecast to average around 4% per year in 2014-17. The current-account deficit is forecast to average about 6% per year in 2013-17.
The USL is in a strong position in parliament to pursue its policy agenda, but is likely to face opposition from vested interests to planned structural reforms. There is also the risk of a popular backlash against the USL if economic recovery does not get under way this year.
The government will find it difficult to reduce the budget deficit to the targeted 2.1% of GDP in 2013 without implementing unpopular cuts to public spending. The finalisation of the IMF stand-by agreement has been delayed until end-June, pending structural reforms, and this will delay negotiation of a new arrangement.
Country Risk Service Romania
Romania at a glance: 2013-17
OVERVIEW
Key changes from last month
Political outlook
Economic policy outlook
Economic forecast
Risk assessment
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Sovereign risk
Current assessment
Positive factors
Negative factors
Outlook
Currency risk
Current assessment
Positive factors
Negative factors
Outlook
Foreign-exchange regime
Banking sector risk
Current assessment
Positive factors
Negative factors
Outlook
Generic risks
Political risk assessment
Economic structure risk assessment
Country risk
Overall country risk
Rating definitions
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Overall country risk
Central scenario for 2013-17: Political stability
Central scenario for 2013-17: Election watch
Central scenario for 2013-17: International relations
Central scenario for 2013-17: Policy trends
Central scenario for 2013-17: Fiscal policy
Central scenario for 2013-17: Monetary policy
Central scenario for 2013-17: Economic growth
Central scenario for 2013-17: Inflation
Central scenario for 2013-17: Exchange rates
Central scenario for 2013-17: External sector
Central scenario for 2013-17: External financing requirement
Central scenario for 2013-17: External debt
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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