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Romania Country Report - Issue 1, 2016

  • ID: 3612967
  • February 2016
  • Region: Romania
  • 31 Pages
  • Emerging Markets Direct
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Romania's GDP Will Accelerate to 4.2% this Year from 3.6% Last Year

FEATURED COMPANIES

  • BCR
  • Carpatica
  • Nextebank
  • Sanpaolo Romania
  • MORE

The report covers info as of February 07.

Fitch forecasts Romania's economy will grow by close to 4% in 2016, well above the projected median growth rate of European and BBB peers. The government expects the growth rate to further accelerate in the coming years. But as the growth gains momentum, the analysts express increasingly more concerns related to the sustainability of the expansion.

The GDP is “doped”, central bank’s chief economist Lazea said, while Fitch warned of fiscal risks as well. The European Commission sees the income policies in the budgetary sector as generating risks as well. Wages tend to rise more than productivity, the central bank also warned in its monetary policy comment.

The sustainability of the high growth rates expected for the coming years depend on the tax evasion, better public administration functioning and structural reforms – and eventually on the investments generated by better business environment. Such “soft” measures can easily shift upward the potential growth rate from 3%, where the central banks sees it at this moment.

Romania's GDP will accelerate to 4.2% this year from 3.6% last READ MORE >

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FEATURED COMPANIES

  • BCR
  • Carpatica
  • Nextebank
  • Sanpaolo Romania
  • MORE

1. Executive Summary

2. Relationship With IFIs
- Fitch affirms Romania's ratings, warns of fiscal risks
- Judicial reform in Romania not yet irreversible – EC's CVM Report
- CoE praises anti-corruption drive in Romania, recommends better prevention

3. Politics
- Government Opts Not To Amend Local Election Law

4. Real Sector
4.1 Corporate, structural reforms
4.2 GDP, forecasts
- Bank analysts say annual GDP growth in Romania could exceed 5% in 2016 but c-bank chief economist says GDP growth is “doped”
- EC forecasts higher growth, but deeper deficits in Romania
- Romania confirms 3.7% GDP growth for Jan-Sept
4.3. Industry, Constructions, Retail
- Construction works in Romania up 9.4% y/y in Jan-Nov on low base in civil engineering
- Retail sales 8.9% up y/y in 2015 after double-digit growth in H2
4. Prices, Inflation
- Inflation remains negative, minus 0.9% y/y in December, on VAT rate cut effects
4.5 Labour Market
- Net wages in Romania up 10% y/y in November
- ILO unemployment rate stagnates at 6.7% in December

5. Fiscal Sector
5.1 Budget Execution
- General budget deficit narrows by 10% y/y to under 1.5% of GDP in 2015
5.2 Public Debt
- Romania faces high debt sustainability risks, says EC’s Fiscal Sustainability Report
- Romania to issue new euro-denominated debt on foreign, local markets

6. Financial Sector

7. Monetary Policy
- Central Bank Maintains Monetary Policy At Feb 5 Meeting

8. Bank Regulations
- Romania’s lawmakers defer talks on key bill on mortgage loans
- Central bank tones down criticism of controversial mortgage loans bill
8.1 Bank Loan Quality
- Overdue loans in Romania drop below 10% of total loans at end-2015
8.2 Loans, Deposits
- Stock of loans 3% up y/y in 2015, after 6.5% decline in previous two years
- Banks extend 29% y/y more new loans in 2015
8.3 Corporate
- Intesa Sanpaolo Romania sells €287mn NPL bundle at 90% discount
- Romania’s BCR plans to sell NPL bundle worth over €1bn
- Nextebank holds 55% in Romanian Carpatica bank after two-step takeover
- Insurance market 8% up y/y in 2015, but remains in red

9. External Sector
9.1 Balance of Payments
- Romania’s C/A deficit widens by 129% y/y to €1bn in Nov
9.2 Foreign Trade
- Romania’s trade gap widens by 81% y/y in November as imports rise 8.5% y/y
- Romania’s exports up 1.8% y/y in November, fourth consecutive month of slow growth
9.3 External Debt
- Romania’s long-term external debt 5.6% down ytd at end-Nov 2015
9.4 Forex Reserves

Table 1: EC Winter Forecast
Table 2: Industrial production [%, y/y]
Table 3: Construction Works Volume Index [%, y/y]
Table 4: Retail Sales Volume Index [% y/y]
Table 5: Consumer, Producer Prices [%, y/y]
Table 6: Wages, employment
Table 7: General government budget [RON mn]
Table 8: Romania’s gross public [RON, EUR bn, % of GDP +breakdown]
Table 9: Romania CA balance Jan-No 2015 [BPM6]
Table 10: External debt [EUR mn]

Fig. 1: Seasonally adjusted GDP
Fig. 2: Drivers of GDP growth, utilisation side [main elements]
Fig. 3: Drivers of GDP growth, utilisation side [detailed]
Fig. 4: Drivers of GDP growth, formation side
Fig. 5: Industrial production [2010=100]
Fig. 6: Industrial Production, seasonally & workday adjusted [2010=100]
Fig. 7 Industrial Production, not adjusted, 12-m average y/y
Fig. 8: Construction Works Index [2010=100]
Fig. 9: Construction Works, seasonally & workday adjusted [2010=100]
Fig. 10: Construction Works Volume Index, incl. 12-month average % y/y
Fig. 11: Retail Sales Index, seas. adj. [2010=100]
Fig. 12: Retail Sales Index, seas. adj. [2010=100]
Fig. 13: Consumer Price Index [y/y]
Fig. 14: PPI vs. CPI [y/y]
Fig. 15: Industrial production price: domestic vs. external
Fig. 16: Average net wage [2000=100]
Fig. 17: Employment vs. unemployment
Fig. 18: Romania’s public debt [% of GDP]
Fig. 19: Banking system’s net profits [EUR]
Fig. 20: NPL ratio
Fig. 21: Overdue payments on bank loans
Fig. 22: Stock of non-gov bank loans [EUR mn]
Fig. 23: Non-government deposits
Fig. 24: Foreign trade balance [EUR mn]
Fig. 25: Rolling 12M exports [EUR mn]
Fig. 26: Forex Reserves at BNR

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- BCR
- Carpatica
- Nextebank
- Sanpaolo Romania

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