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CFA Romania Macroeconomic Confidence Indicator drops eight points in May from April 2018

The CFA Romania Macroeconomic Confidence Index declined eight points in May from the previous month, to 41.5 points, and 25.1 points from the same month of the previous year, according to the CFA Romania investment professionals’ association.

According to the quoted source, the developments were the result of movements in both components of the indicator.

Thus, the indicator for current conditions decreased by 9.5 points from the previous month to 56.9 points (compared with the same month of the previous year, the indicator of current conditions decreased by 27 points). The expectations indicator fell by 7.2 points to 33.8 points (compared with the same month of the previous year, the indicator fell by 24.1 points).

With regard to the euro/leu exchange rate, about 90pct of participants are expecting the local currency, the leu, to depreciate in the next 12 months from the present value. Thus the average value of the expectations for the 6-month horizon is 4.7046, while for the 12-month horizon the average value of the rate is 4.7603.

The expectations over inflation rate for the 12-month horizon (May 2019 / May 2018) averaged 4.58pct.

“It is worth noting the expectations for increased interest rates (against the current values) for the RON for both short-term (3 months) and medium-term (5 years) loans, as 92.5pct and 87.5pct of the participants in the survey are expecting such development, respectively, with the average ROBOR3M expected in 12 months standing at 3.45, and the 5Y Romanian sovereign bond RON yields expected in 12 month at 5.03pct. As a result, for short-term maturities, real negative interest is anticipated,” says CFA Romania.

According to CFA Romania, in May 2018, a new question was added to the survey, namely: what is your expectation for Romanian country risk premium, measured as 5Y USD CDS (bps)? To this question, over 87pct say they are expecting an increase in the country’s risk premium, with the average value standing at 112 bps (an increase by about 20 bps from the current value).

The CFA Romania Macroeconomic Confidence Index was released by CFA Romania in May 2011 and is an indicator through which the association tries to quantify the financial analysts’ predictions about economic activity in Romania for a one-year horizon.

CFA Romania is an association of investment professionals in Romania, mostly chartered financial analysts (CFA), a qualification administered by the CFA Institute of the US.

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