CFA Romania poll: analysts’ sentiment improves slightly in May

The analysts' sentiment continued to improve slightly in May after a more substantial recovery seen in April, according to the monthly poll of the CFA Romania association.

Still, the indicator lags significantly compared to the sentiment one year ago, when it was rallying after the plunge prompted by the emergency ordinance OUG 114 at the end of 2018.

The improvement through May was mostly visible in the Macroeconomic Confidence Indicator, which advanced by another 3.7 points to 36 points (15.5 points down year-on-year) after the 11.6 points recovered in April.

The index plunged by 28 points in March to 20.8 points amid the COVID-19 outbreak.

Only half of the plunge has thus been recovered so far. The current conditions sub-indicator remains subdued at 19.4 points, with the much stronger expectations sub-indicator (44.4 points) indicating certain optimism given the context.

Both sub-indicators advanced by 3-4 points in May compared to April.

The analysts' improved sentiment was also visible in the consensus forecast regarding the economic contraction this year: 4%, compared to 5.2% projected in April.

The estimates for year-end unemployment went down to 7.8% from 8.3% in April. The analysts now expect a budget deficit of 8.5% of GDP compared to 7.8% in April.

"It is worth noting the expectations of increasing Romania's risk premium, approximately 69% of participants predicting a price increase of the CDS (credit default swap, proportional to the default risk of a certain debt instrument) with a maturity of 5 years. Over 69% of participants also consider real estate prices in large cities as overvalued," reads the CFA Romania press release.

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