“Romania’s main challenges in 2014 concern the banking sector, which is affected by the growing level of non-performing loans, as well as the record number of insolvencies among large- and medium-sized companies in 2013, which will reflect into 2014 as well and will hinder the country’s economic development,” said Constantin Coman, country manager Coface Romania.
In the absence of new regulations regarding insolvency proceedings, the rating agency estimates the number of insolvencies will increase by up to 10% in 2014, from around 27,000 in 2013.
Coface has left its sovereign rating on Romania unchanged at “B”, meaning local companies pose a significant risk of defaulting on their own debt.
Romania has been under a ‘B’ rating since June 2009.
The rating agency expects Romania’s annual inflation will decelerate to below 1% in the first quarter of 2014. However, inflationary pressures are forecast to increase in the second half of the year, which could translate into an annual rate of 3% to 3.5% in December.
Coface said the leu is likely to stabilize at 4.55 against the euro in 2014.
“The projection doesn’t consider potential sudden movements in the US Federal Reserve’s policy or political slippages at home,” Coman said.