Leading global credit insurance agency expects economic slowdown in RO

Early indicators point to a slowdown of the Romanian economy in the next quarters, according to Euler Hermes, the global leader in commercial credit insurance and a recognized specialist in collateral and debt collection, which carried a study about Romania’s country risk.

The consultancy firm outlines that the country's output in the important automotive sector has been shrinking since June 2019.

It also expects the new government that took office in November 2019 to rein in fiscal spending, at least to some extent, which will also curb growth.

Overall, against the backdrop of declining global demand, ongoing trade tensions and much reduced growth in the Eurozone – Romania's top export destination – Euler Hermes forecasts full-year GDP growth to come in at +4.2% in 2019 and to slow down to +2.8% in 2020.

A more sudden drop in economic growth, which is not Euler Hermes’ central scenario, could take place against the background of the rising twin deficits, expansionary fiscal policy, elevated inflation and the weakening global economic outlook.

While not being the central scenario, it cannot be ruled out entirely that a shift in investor sentiment, a considerable decrease in export demand, as well as domestic policy shocks, could at some point result in capital outflows and cause a sudden stop to economic growth, the debt collection agency commented.

The odds for such a scenario depend on the Government’s steps to improve investor confidence, it concluded.

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