The decisions to be made over the next three months in Romania and how the country will be able to pull through December’s parliamentary elections will weigh heavily. The budget and economic policies the new administration will come up with are also crucial, according to analysts.
Over the next few months it is very important for the economy to return to the spotlight, taking precedence over politics, analysts say.
ING Bank sees three reasons why prospects are good for next year: the economy of the euro zone is expected to return to growth, Romania will get through elections and the chances of a negative contribution of agriculture seem significantly lower. But what counts very much is also how the economic policies will be adjusted by the new administration, says Vlad Muscalu, senior economist of ING Bank.
Considering the recent decisions adopted by the Central European Bank, the premises have been created for the eurozone to see an economic rebound in 2013, which would have a positive impact on the Romanian economy – both through industry/exports and through financing and capital inflows, says Georgiana Constantinescu, Credit Europe Bank analyst.
The Central European Bank has set up an unlimited program for the acquisition of government bonds in a bid to bring under control the high borrowing costs of certain eurozone countries.
The law of the state budget, the most important piece of legislation of a fiscal year, should be realistic and give priority to funds allocated for public investments in infrastructure. But in the coming months until the 2013 budget is put together, Romania’s priorities should be to attract foreign investments, public-private partnerships, as well as public investments in infrastructure by drawing EU funds, analysts say.
“It is essential for Romania to come up with a set of successful projects in the immediate future in order to bring economic topics back into the spotlight, with politics taking a step back. This would mean the completion of major infrastructure projects, continuing privatization of state-run companies, a new eurobond issue, announcing a major investor in a sector with export prospects,” says Eugen Sinca, BCR analyst.
Increasing investments in infrastructure by attracting European funds or starting public-private partnerships should be a priority for Romania over the next three months, with a view to supporting economic growth, according to Sinca.
In turn, Vlad Muscalu, senior economist at ING Bank, believes participants in the financial market and investors in general would appreciate it if the rules of the Romanian business environment were simplified.
“The fact that Romania ranks 72nd in the latest Doing Business ranking that looks into the ease of doing business of medium-sized companies suggests there is room for improvement.”
At the same time, what is essential over the coming period is to restore trust in the Romanian economy. Romania needs predictability, planning and a clear investment strategy. From a macroeconomic point of view what is essential is to meet commitments undertaken in the letter of intent with the IMF, in particular those to do with arrears, with the restructuring and privatization of state-run companies, Constantinescu believes.
Romania is expected to record economic growth of 2%-3% next year, according to most estimates, while for 2012 most forecasts point to 0.5-1%.
Romania’s official economic growth forecast for 2012 is 1.2%.
(English version by Daniela Stoican)