Romania‘s economic recovery will outperform most regional peers and move onto a firmer footing over the coming quarters according to Business Monitor International (BMI).
BMI also estimates that household consumption will compensate for net exports‘ lower contribution to economic growth in the coming years.
Business Review, Nov. 26, 2014
We expect the Romanian economy to grow at an average of 2.7% over 2014-2017, as incomes rise with gradual productivity gains, [and] growth recovery should aid moderate further consolidation of government finances. We are therefore affirming our long- and short-term foreign and local currency sovereign credit ratings on Romania at ‘BBB-/A-3‘. The stable outlook balances the likelihood of fiscal and reform programs exceeding our expectations, against the possibility of external imbalances re-emerging.
With a larger share of financing from non-debt-creating sources, we expect Romania‘s stock of external debt to continue to decline over the forecast horizon. Over time, the implied reserve accumulation may lead to exchange-rate appreciation, which we would see as likely justified by underlying productivity growth. This would lead to rising levels of wealth, as measured by dollar per capita GDP.
Standard & Poor‘s Rating, Oct. 17, 2014
Moody‘s Investors Service has today changed the outlook on Romania‘s Baa3 government bond rating to stable from negative. Concurrently, Moody‘s has affirmed Romania‘s Baa3/P-3 government bond ratings [due to] the decline in risks to Romania‘s growth and external financing outlook owing to a recovery in the euro area, with which Romania has strong links. The key drivers of Moody‘s affirmation of Romania‘s government bond ratings are the reduction in the fiscal deficit and moderate government debt levels, which alleviate some of the risks posed by the government‘s reliance on external and foreign-currency debt to meet its financing needs and Romania‘s access to multilateral financing, which buffers the risks to external debt-repayment capacity that international market volatility can generate.
Although Romania‘s external debt remains high, the significant narrowing of the current account deficit – from an average of 10.5% in the five years prior to the crisis — has lowered the pace of external debt growth, another factor supporting a stable outlook.
Over the medium term, Moody‘s expects Romania to continue along the path of income convergence with wealthier EU trading partners, supported by competitive wages and future policy measures to enhance productivity and the operating environment.
Moody‘s, New York, April 25, 2014
Some economists have said fears of a sudden influx from Romania are exaggerated because Britain has historically absorbed migrants from around the world. Romania‘s unemployment rate of about 7 percent is roughly the same as Britain‘s and less than one-third of Spain‘s. Economic growth is at 4.1 percent. The Economist said in a commentary article, “The average Bucharest resident is comfortably better off than the average resident of Manchester.”
The New York Times, Jan. 1, 2014
Earlier this year, The Mail sent a reporter to speak to some Romanians in their “tiny clay hut”. The finished story, under the headline “by January, the only thing left will be the goat,” gives some indication of how Romania is portrayed in the tabloids. Yet the country is wealthier, more dynamic and more sophisticated than such stories suggest. Unemployment there is relatively low (and lower than in Britain). Its budget deficit puts Britain to shame. The government is in the midst of liberalizing the economy, opening up new sectors (most notably, energy and telecoms) to competition and investment. Economic growth is at 4.1%. Wages are rising fast. Adjusting for prices, Bucharest‘s GDP per capita is above the EU average. Indeed, the average Bucharest resident is comfortably better off than the average resident of Manchester.
The Economist, Dec. 17, 2014
Philippe Garcia, director of the economic mission at Ubifrance Romania,
says that a growing number of French companies seeking to relocate their
businesses from countries such as China back into Europe see Romania
as a top destination.
He adds that French investors looking to tap the local market see high potential in a wide array of sectors including automotive, infrastructure and agribusiness. Garcia points out that trade between France and Romania exceeded EUR 7 billion last year and is set to grow further this year, already expanding by 9 percent in the first half of 2014.
The feedback from the Business Forum is very positive. First of all, almost 80 French businesspeople coming from France had the opportunity to discover
an unexpected Romania, completely distinct from the counterfeit image that
usually pervades their mind: Bucharest showed itself to be a premium huge
regional business hub! Furthermore, many of them had the opportunity to
start doing business with partners from Romania and 12 other countries from