Moody’s sees “favourable growth prospects” for RO, but warns of “expansionary fiscal policy”

International rating agency Moody’s confirmed Romania’s Baaa3/stable supported by favorable medium-term growth prospects that balance the fiscal and external vulnerabilities.

Romania’s main credit strength is its economic growth potential of around 4%, one of the highest in the Central and Eastern European region. Moody’s expects that resilient domestic demand will support real GDP growth of 3.3% in 2019 and 3.5% in 2020.

The main credit challenges include the expansionary fiscal policy stance that has eroded consolidation gains since the 2008-09 global financial crisis. Its relatively low absorption of EU funds and rising domestic political volatility associated with increasing external vulnerability also weigh on the credit profile.

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