Romanian analysts expect 6.5%-of-GDP public deficit and mild currency depreciation

Nearly half (48%) of the local analysts polled by the CFA Romania association under its monthly survey among members anticipate that the economic impact of the pandemic “will be felt strongly” until the fourth quarter of this year.

The analysts also warned that the real estate prices in first tier cities are overvalued and that the CDS price (reflecting the price of sovereign borrowing) will increase, Ziarul Financiar reported.

They expect the budget deficit to hit 6.5% of GDP this year and project only moderate weakening of the local currency over the next 12 months - some 2% to an exchange rate of RON 4.99 to EUR. The annual inflation rate is estimated at 3.8%, according to the CFA survey conducted by CFA Romania in the last week of March.

The Macroeconomic Confidence Indicator calculated by CFA Romania plunged in March by 27.7 points compared to February, to 20.8 points - the lowest value since July 2012. This decline was mainly due to the current conditions component of the indicator, which fell by 57.5 points in the context of the crisis generated by the coronavirus, to the value of 13.1 points - the lowest value since August 2012.

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