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Oxford Economics identified the greatest risks for the Romanian economy: China and the US Federal Reserve
The main risks for the Romanian economy are the slowing down of China’s economy which would wipe out two percentage points from the estimated growth of GDP as well as the strengthening of the monetary policy by the US Federal Reserve with negative impact of one point, according to Oxford Economics.
Romania’s economy would advance by 3.8% this year, to gradually slow down at 3.2% the next year and to 2.9% in 2018, while for 2019 the GDP growth is estimated at 3.2%.
‘In the case of strong slowing down, the situation in China deteriorates as the investments are affected on several channels. The shock recorded by China extends to other countries, and the global economy growth goes down to 1.7% the next year. The economic advance of Romania slows down significantly against the basic scenario due to the reduced demand for exports’ according to a report of the British consultancy company.
A risk similary important is the growth of interests by the American central bank followed by a stronger reaction than expected on the part of the bonds markets.
‘In this scenario, the scenario goes down and the financing conditions become more difficult at global level. The growth of Romania goes down with approximately 1 percentage point as a result of the reduced demand for exports to the euro zone and the restrictive conditions for loans’ the report shows.
Internally, the economic risks are concentrated on the impact of fiscal relaxation on the sustainability of state finances on medium-term, but the political uncertainty is a major problem, but the political tension will increase in the context of elections, the British analysts say.
At the same time, Romania is still exposed to a possible exit of Greece from the euro zone, both by banking connections, and by the impact of a Greek crisis at European level.
A positive surprise for the economy could come in the context of anti-corruption fight which determined a diminution of fiscal evasion and the increase of the state income. The effects of corruption combating could reduce the impact of fiscal relaxation on the state finances, notes Oxford Economics.