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Moody's: Romania to record a lower economic growth than other countries in Baa3 category
The Romanian economy recovery will likely remain subdued in short run due to exposure on Europe and, in 2014, the GDP growth will remain lower than that of other economies similarly rated outside the region, the credit rating agency Moody's says in a report released on Thursday.
However, in the medium term, Romania's integration with most developed economies in Europe could lead to increases in revenue and productivity, the cited source also says.
According to the latest edition of the World Economic Outlook report, the International Monetary Fund estimates that, this year, Romania will register an economic growth of 2 percent , followed by an advance, to 2.2 percent in 2014.
In respects of the ' Baa3 ' rating with a negative outlook assigned to Romania, Moody's believes that this takes into account the fiscal consolidation achieved in the last two years, but is still constrained by the weak outlook for economic growth .
Another limiting factor is Romania's exposure to volatility on global financial markets because of its dependence on external financing both to cover the necessities of financing of the Government, as well as of the private sector, Moody's believes. This vulnerability is reduced by Romania's capacity to receive financial support from the EU, World Bank and IMF.
The rating Agency stresses that it could revise the outlook associated to Romania's rating ( from negative to stable ) if the fiscal consolidation continues, the pace of economic growth will accelerate and if the current trend recorded by the quality of banks' assets and bank lending would reverse. On the other hand, Romania's rating could be pressured downward if fiscal consolidation and current account adjustment is reversed, or if the Romanian economy crosses a prolonged slowdown due to a declining international competitiveness.