Capital Economics believes Romania's fiscal consolidation efforts complicated by likely recession

The budgetary measures taken so far by the government of Romania are insufficient for stabilising the public debt to GDP ratio, and taking further steps will be complicated by recession – a "very likely scenario" for H2 this year – and the lack of coherence among the members of the ruling coalition, according to Nichollas Farr, analyst for global macroeconomic firm Capital Economics.

Thus, Romania's cost of borrowing (10-year, local currency) is likely to end the year around the current level of 7%, but it will come under pressure once the effects of past budgetary measures are absorbed and further actions are needed, according to Capital Economics, as quoted by Cursdeguvernare.ro.