The CFA Romania Association’s Macroeconomic Confidence Indicator increased by 2.3 points in August, to a still very modest level of 37.2 points, with both components (current conditions and expectations) in the recessionary side of the 0-100 point scale. The indicator bottomed out in July after the newly formed government pushed the first package of budgetary measures and further advanced in August as Fitch and Moody’s affirmed the country’s fragile rating.
The two components had different developments, however. Thus, the expectations component increased by 0.5 points, to 34.2, while the current conditions component increased by 5.8 points, to 43.4.
“After the rating agencies affirmed Romania’s sovereign rating, the confidence indicator has registered an increase over the last two months. However, the value of the indicator and of both its components still indicate recessionary conditions. Also, the imbalances at the macro level, as well as the unpredictability of fiscal policy, will maintain uncertainty regarding the evolution of the Romanian economy, which is also reflected in the expectations component of the indicator,” commented CFA Association’s president Adrian Codirlasu.
Economic growth expectations for 2025 are slightly down compared to the survey conducted a month earlier, at an average value of 0.7%, with some of the participants expressing opinions regarding a possible entry into recession of the Romanian economy.
Independent analysts’ projections diverge significantly in the context of a wide gap between the H1 readings under the two different methodologies used by the statistics office: 0.3% y/y under the previous-year-prices, old methodology, and 1.5% y/y under the new chain-linked-volume methodology recommended by Eurostat. Expectations range from 0.3% by ING Romania and 1.3% by Erste Group. The state forecasting body projected 0.6% growth for this year this month.
The state budget deficit forecast for 2025 increased slightly compared to the previous survey, to the average value of expectations of 7.7% of GDP (cash terms). This is an unrealistic expectation, however, already rejected by prime minister Ilie Bolojan: the public deficit will rise above 8% of GDP according to the government’s statements, not yet confirmed by an official budget revision – expected for this week.
According to the CFA survey, 88% of participants anticipate Romania remaining in the investment grade rating category in the next 12 months.
iulian@romania-insider.com
(Photo source: Tero Vesalainen/Dreamstime.com)
Leave a Reply