At its budget revision, the Government estimated an economic contraction of 1.9% for 2020, but analysts forecast contractions of 8% to 9%. The Government will probably revise its forecast, especially since it must account for no longer being able to increase pensions by 40% as of Sept 1.
The uncertainty in the economy is very high and the reaction of companies and consumers has no linearity, but it is impacted by various events.
The central bank has also carried out an extended analysis regarding the impact of the coronavirus-led crisis on the Romanian economic sectors.
Per the central bank’s analysis, the category of goods to see the steepest decline in demand also includes vehicles, given that the start of the car park renewal program in March will not offer the incentives necessary to overcome both the decline in purchasing power and people’s decreased appetite for the purchase of durable goods which entail a high initial cost.
Instead, the food, pharmaceuticals and chemical industries are among the few winners of this crisis. Also, the IT&C sector will continue its robust trend, being rather unaffected by the mobility restrictions imposed by authorities, due to its specificity.
”The exposure of the local economy on the automotive sector is not necessarily a vulnerability. However, most economic sectors in Romania will be severely affected,” per central bank’s analysis.