Macroeconomic Report Romania 2013

Coface maintained Romania's country risk assessment as B, the risk class that shows an unstable economic and political environment, able to impede an already scarce history of payments. Romania remains vulnerable due to the structural nature of internal and external unbalances and the high financing demand, in the context of insufficient domestic savings. The banking system remains affected by a higher level of bad loans. 

For 2014 we expect for the economic business to maintain its ascending trend, but with a slightly moderate final growth, in the context of:

• A more moderate increase of exports compared to 2013
• A zero contribution of agriculture to the economic growth 
• The gradual but hard recovery of consumption 

Under these circumstances and in the context of side slips on the political stage, we expect an actual GDP increase of 2.1% for 2014 (basis scenario), which is anyway a better result, compared to the one registered in 2013, eliminating the effect of agriculture (approximately 1.5%).

We estimate that, during 2014, the local currency will continue to show a constant evolution, with more risks concerning a trend of slight depreciations. The main reason is that the growth potential of non-residents' demand for T-bonds denominated in local currency is limited, in the context of extremely low actual yields. In the basic scenario (that does not consider sudden changes in the FED monetary policy, nor political side slips on the local stage), we estimate an average exchange rate of approximately 4.55 EUR / RON for 2014.

Thus, we can appreciate that the "deleveraging" process can be found both among the general public and among the private non-financial companies, with a higher frequency among the latter. A higher precaution regarding the credit and consumption appetite is also confirmed by the stagnating demand for new loans and which has a level of approximately 10 times lower than the one registered in 2008. The incapacity of the banking sector to invest the liquidity surplus under extremely advantageous credit terms, in particular for loans denominated in local currency, confirms the reluctance of economic operators concerning the crediting process, in the context of incertitude and a low level of consumer confidence, at the minimum threshold of the EU zone (28).