BUSINESS

Moody’s, optimistic for Romania’s economy: Economic growth of 3 pc in following years, mainly consumption-driven

Moody’s, one of the three big credit rating agencies, estimates that the improvement of economic competitiveness, the lowering of macroeconomic imbalances and the recovery of the labour market and of internal consumption will allow Romania to register an average economic growth of approximately 3 per cent in the following years, according to a report on Romania published by Moody’s on Friday.

Likewise, the rating agency claims that the fiscal policy will not be affected by the recent political instability, against the backdrop in which fiscal reforms helped Romania lower its fiscal deficit to 1.5 per cent of GDP in 2015, from 8.9 per cent of GDP in 2009.

On the other hand, Moody’s notes the relatively high level of external debt and the inefficiency of certain state-owned companies, factors that create problems for the Government and limit infrastructure development.

“Romania continues to register solid economic growth, as a result of the growth in exports and internal demand, against the backdrop of low inflation. Nevertheless, weak growth of internal crediting means there is limited room for the intensification of economic activity,” Moody’s analyst Mathias Angonin comments.

According to Moody’s, the lowering of the deficit and the improvement of economic growth support the “Baa3” stable outlook rating offered to Romania, although the relatively high level of external debt and the risk of a slowdown in regional trade represent difficulties.

Likewise, gradual economic integration with neighbouring states continues to boost productivity, alongside the financial support and policy supervision offered by the European Union and the International Monetary Fund. Moreover, banking sector risks have diminished, against the backdrop in which the quality of bank assets has improved as a result of a drop in bad credits, the Moody’s report adds.

Each of the two other big credit rating agencies, Standard&Poor’s and Fitch, offer a rating of BBB- to Romania’s long-term forex debt.

 

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