Economic analyst: Fear of what may happen in the future

Analysts' confidence in the Romanian economy fell last month amid recent political developments.

A survey of experts forecasts higher inflation in the coming year, a depreciation of the leu and lower economic growth than previously estimated.

CFA Romania's Macroeconomic Confidence Indicator fell in November by 13.5 points to 31.4 points, the lowest level recorded since July 2020, amid extremely high political uncertainty and a sharp increase in investors' risk aversion, underlines the association's president, Adrian Codirlasu.

Investors have also been scared in this context and our indicator has fallen to levels not seen since the Corona crisis, that's how strong the impact and the fear of what may happen in the future is. Basically, what also emerges from this survey, a slightly rising inflation, so somewhere around 5% over the next 12 months, but also higher interest rates over the next 12 months, even significantly higher, I mean, for example, at the Romanian government financing rate even 1% higher than in October.

As for the euro-leu exchange rate, 77% of the association's analysts participating in the survey anticipate a depreciation of the leu over the next 12 months, while the rest expect it to stagnate.

Thus, the average value of expectations for the six-month horizon is above 5.03 lei, while for the 12-month horizon it exceeds 5.08 lei for one euro.

The state budget deficit forecast for 2025 is expected to average 7.2% of GDP, economic growth at 1.3%, and public debt is expected to reach 58% of GDP over the next 12 months.

Translated by: Radu Matei