“Rating agencies do not just look at the widening of the current account deficit, but also at whether the authorities are aware of the severity of this situation”, Isarescu pointed out.
The governor said we are watching the accentuation of the external imbalance against the backdrop of domestic absorption beyond the economy’s potential. The excess consumption demand kept eroding the current account.
“One cannot say that exports had a poor trajectory, the problem is with imports”, Isarescu also said.
The governor emphasised that the share of the government debt in the gross domestic product (GDP) did not go up, staying put at 35%, which is also due to the GDP growth, but the problem is what we do with the money borrowed.
Isarescu went on saying the annual inflation rate for June 2019 announced by the country’s statistics board on Wednesday is good, adding that he expected a higher inflation rate.
“Personally, I did not expect it to go below 3.9%, therefore, the 3.8% rate came as a surprise”, he said.
The central bank governor expects a potential moderation of the inflation in the second half of 2019. “It went below 4%; we have anticipated this evolution and, probably, with a good crop year, the end of the year could bring anything but what was projected in the spring”, Isarescu concluded.
Romania’s annual inflation rate slowed to 3.8% in June 2019, from 4.1% in May and April 2019, data from the statistics board INS showed Wednesday, July 10.
Romania’s central bank revised its 2019 year-end inflation forecast to 4.2%, well above its variation target band, from a previous forecast of 3%, after the annual rate climbed to a higher than expected 4.1% in April.