International financial turbulence will not affect Romania on long term

An analysis conducted by 'Business Standard' daily suggests that, despite difficulties on international money markets, bankers, brokers and investors trust the Romanian economy stands all chances not to report too big losses. BCR CEO Manfred Wimmer says there are indicators that the local economy will continue to grow in 2008 although a lower rate than in 2007 is quite possible.

According to Wimmer, prospects are promising for Central and Eastern Europe and a number of short-term fluctuating developments may be neutralised by the long-term convergence process. The BCR CEO also expects the negative effects of the international financial turbulences on Romania to wither in the latter half of 2008 especially if it is a good agricultural crop and a better industrial performance year.

BRD-GDG Chairman and CEO Patrick Gelin in turn recognizes one first effect in the more expensive international financing now available to Romania, followed by the declining stock quotations on the Bucharest Stock Exchange and the depreciation of the local currency RON vs. EUR. According to Gelin, all such phenomena are partly accused by the local macro-economic conditions because there are some question marks as to the evolution of economic indicators and lack of visibility of the medium-term Government intentions. Gelin says that the first indication of how deep the crisis is will be the large banks' financial results for 2007.

UniCredit Tiriac Chairman of the Board Dan Pascariu states Romania will not be affected by the US mortgage crisis because none of the parent banks of the main banking players on the local market has suffered any notable loss from the crisis. On the other hand, Pascariu warns that most of the lending organisations operating in the country on the impulse of their parent-banks will make their risk-management policy more demanding and loans in both RON and EUR will become more expensive.

Mihai Bogza, chairman of Bancpost Board of Directors emphasizes the fact that, internationally speaking, the effects of the credit crisis will remain visible for the entire duration of the year and will only loose in intensity in 2009. In what regards Romania, Bogza thinks the stock exchange has suffered some adjustments from the most likely too high values registered before. However, he reckons the adjustment will be limited in the future.

Romanian investor Catalin Chelu expects the fluctuations to continue and thinks everything depends on when the US market starts recovering from the crisis.

Andrea Ferancova, Wood&Company Director of Equities shows that a US depression that will also have a notable bad influence upon Western Europe shall also impact Central and Eastern Europe as the majority of the exports of countries in this region goes into Western Europe.

On the other hand, BCR capital market analyst Mihai Caruntu stresses out that the crisis will continue as long as the news about the American economy remains negative. Should analysts and investors' predictions be proved more pessimistic than the actual situation, a redress of the money markets starting in Q2 this year is much more likely, Caruntu says.

Raiffeisen Investment Manager Bogdan Bilaus thinks it is too early to label the state of play as crisis. The development of the world economy is cyclic and now we are at the beginning of a potential recession in the USA. It remains to be seen if the phenomenon is global or not, Bilaus says, adding that Romanian investors should better start learning making medium and long-term investing decisions, based on objective assessments rather than emotions, just to make sure the local capital market goes safely past this period.

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