Romania Economic Outlook
November 3, 2020Following a record GDP drop in Q2, available data points to a gradual recovery in Q3. Industrial output fell less steeply in August, improving for the fourth month running. This, coupled with a softer drop in merchandise exports in July–August and stronger economic sentiment in Q3 compared to Q2, hints at a pickup in private sector activity. Less positively, surging Covid-19 cases prompted authorities to extend the state of alert on 15 October for a month and introduce new restrictions in Bucharest, boding ill for the recovery in Q4. In politics, polls indicate that the ruling pro-market PNL party is leading the race in the run-up to December’s general elections, although it is unlikely to secure an absolute parliamentary majority. Lastly, on 30 October, Fitch Ratings affirmed the country’s BBB- rating with a negative outlook, citing its moderate public debt.
Romania Economic GrowthThe economy is expected to contract at the sharpest pace in over a decade this year before rebounding strongly in 2021. Strengthening foreign demand, particularly from German industry, is expected to bolster domestic production and ramp up exports. Nonetheless, the unpredictable course of the pandemic and political uncertainty ahead of the elections cloud the outlook. Our analysts see the economy growing 4.5% in 2021, which is up 0.1 percentage points from last month’s forecast, and 3.8% in 2022.
Romania Economy Data
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|Bond Yield||4.49||0.23 %||Dec 31|
|Exchange Rate||4.26||-0.34 %||Dec 31|
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Romania Economic News
November 13, 2020
According to a flash estimate released on 13 November, GDP slid 6.0% year-on-year in the third quarter—a less pronounced drop than Q2’s record-breaking 10.3% plunge—as the gradual relaxation of Covid-19 restrictions allowed for some recovery in activity.
November 12, 2020
Industrial production dropped 2.8% on a working-day and seasonally-adjusted year-on-year basis in September (August: -3.7% yoy).
November 12, 2020
In an unscheduled meeting held on 12 November, the National Bank of Romania (NBR) maintained the policy rate unchanged at its all-time low of 1.50%, the lending facility (Lombard) rate at 2.00%, and the deposit facility rate at 1.00%, in line with market analysts’ expectations.
November 11, 2020
Consumer prices rose 0.22% in October over the previous month, swinging from September’s 0.14% drop.
October 14, 2020
Industrial production slid 5.1% on a working-day and seasonally-adjusted year-on-year basis in August, a softer contraction than July’s 8.1% drop and marking the best reading since February.