UniCredit trusts RO Govt. can cut public deficit to 4% of GDP in 2022

Romania's public deficit will drop to 7% of GDP this year and 4% in 2022, from 9.8% of GDP in 2020, according to UniCredit Bank's latest country report, quoted by Economica.net.

The fiscal consolidation might be even stronger if the economy recovers faster than expected.

The bank's analysts estimate that the country's economy will return to the pre-crisis level around mid-2022, after 3.7% GDP growth this year followed by 5% expansion next year.

The country's GDP contracted by 5.5% in 2020, the bank estimates.

The public deficit trajectory would support the public debt to GDP ratio to stay below 50% and later decline, thus remaining below the median for the group of countries with BBB rating.

The forecast drafted by UniCredit Bank assumes political stability at least until the end of 2022.

The two major ruling parties, the National Liberal Party (PNL) and the reformist alliance USR-PLUS, can't afford to call snap elections, banks analysts say - noting the rise of what they call the "far-right" party AUR - a populist party that has been gaining ground after it took the fourth-highest score in the recent general elections.

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