Erste: Romania, dependent on external markets due to political changes

The Social Democratic Party’s (PSD) decision to change its second prime minister in a year has increased the risk of political instability in Romania to the highest level since the elections in December 2016, according to an analysis of Erste Group Research signed by BCR’s chief economist Horia Braun. The short mandates of Romanian prime ministers have made it very difficult to adopt structural reforms, which makes Romania very dependent on the external environment. “The following days will tell us if there is a way out of this dilemma or if we are heading towards a full-fledged political crisis,” reads the Erste analysis, cited by local Profit.ro. According to Horia Braun, president Klaus Iohannis has a difficult decision to make. He may refuse to nominate another PSD candidate for PM and force early elections, which may help PSD consolidate its majority in the Parliament due to the weak opposition. The other option is to accept PSD’s new proposal, which would weaken his chances to get reelected in the 2019 presidential elections. President Iohannis starts consultations with the political parties on a new prime minister today. editor@romania-insider.com