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Capital Economics : the resignation of the premier may affect the economy, but it is supported by consumption

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The resignation of premier Victor Ponta could affect the economic growth as there is no clear solution for the political situation but the strong advance of consumption makes it unlikely to slow down the GDP increase according to a British company of consultancy Capital Economics.

‘The main way in which the resignation of premier Ponta will affect the economy is if the worries could bring political instability lead to the postponement of investment decisions, on the part of the local investors or of the foreign investors,. The GDP growth could be affected if there is no solution to this situation. Thus, in the context where consumption seems to increase rapidly, I would be surprised to see a strong slowing down of the GDP advance’ stated for MEDIAFAX the analyst Capital Economics William Jackson.

The measures for the increase of salaries and VAT reduction will probably continue by the future government as they are considered populist.

On the financial market, the announcement of the resignation had a limited impact until now, stated Jackson.

‘As Romania has a position of current account in a kind of stability, it is less vulnerable than in the past when it comes to more reduced inputs. At the same time the situation of the government finances is relatively healthy. I don’t expect the leu to go down significantly or to increase the costs of the loans. There will be no major impact on the sovereign rating of Romania’ he said.

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Thursday, November 5, 2015