Fitch: Romanian economy shows overheating signs

Romania's economy continues to grow at an accelerated pace, but its pro-cyclical fiscal policy and wage growths increase the risk of overheating, according to Fitch Ratings. The agency revised last month its forecast on the expansion of the Romanian economy from 4.8% to 5.1% for this year. However, it now warns about the overheating risk. The wages grow at a higher pace than productivity. Romania’s National Bank (BNR) estimates that the economy is operating at 2% above its capacity. The current account deficit could exceed 3% of the GDP this year, according to a Fitch report. The current account deficit reached 2.3% of the GDP last year. Moreover, Fitch expects a budget deficit of 3.7% of the GDP for this year. The rating agency estimates that Romania's economy will slow down its growth in 2018 as the effects of fiscal stimulus will decrease. However, the growth will remain above 3% per year, according to Fitch Ratings. Romanian economy, more vulnerable to crises than in 2008 editor@romania-insider.com