Foreign analysts expect worsening of Romania's economy

Over 1,000 financial experts from 88 countries, questioned by the Ifo institute in Germany, said that the economic situation in Romania and Latvia will be subject to ongoing deterioration in the coming six months.

Romania and the Baltic states received the poorest grades in the region from the specialists questioned by Ifo. In the case of Romania and Latvia, experts said that the coming six months will include a contraction of capital expenses and private consumption. There are two main factors which stand in the way of Romania and Latvia's economic recoveries - the lack of confidence in the government's economic policies and the capital shortage.

Regarding the economic growth forecast for the coming three-five years, the foreign specialists have sharply cut the gross domestic product (GDP) growth estimate to 1.8 percent from 4.6 percent at the end of 2008. The perception of foreigners of Romania deteriorated sharply since the coalition between the Democratic Liberal Party (PDL) and the Social Democratic Party (PSD) fell apart, reflected in the Credit Default Swap (CDS) level, or the sovereign risk premiums. In the second quarter, Romania was the ninth riskiest country in the world, with a cumulative default probability index of over 25 percent, according to the CMA Datavision company, specializing in supplying information on the financial derivative market.

The situation of Romania, Latvia, and Hungary stabilized due to the intervention of the International Monetary Fund (IMF), and Romania was no longer among the top ten riskiest countries in the world in the July-September period. The fall of the government headed by Emil Boc in early October raised Romania's risk premium, and the country is now in ninth place on the CMA list, with a cumulative default probability index of some 18 percent, at the closing price in last week's final session.

standard.money.ro