Over the past ten weeks, Romania has been under tremendous political pressure because of the fight between the new power – Victor Ponta and Crin Antonescu (USL) and the new opposition – Traian Basescu and PDL – which led to a fast deterioration of the economic situation and especially of the prospects of economic growth, which will have major consequences in autumn and in the coming years. Despite a rebound in the second quarter, which could have supported the economy in the third and fourth quarters, the political struggle that started in June took a major toll on the leu, hindered sales of leu-denominated government securities, and ultimately led to capital outflows. In a year in which companies would need a “breather” in business after three years of tough crisis, companies are now dealt a new blow through the depreciation of the leu, as consumption resumed its decline because of clients’ lower disposable income and the piling up of overdue loans because of lower payment capacity. The next six months will be very tense because the political struggle will not be settled very soon and will continue with parliamentary elections.
  1. The EUR/RON exchange rate, and the central bank’s diminished ability to control it
  1. The lowering of the amounts available in Romanian currency for consumption, investments and savings
  1. The Finance Ministry will have a hard time raising revenues, financing the budget deficit and rolling over maturing debt
  1. Economic gridlock will continue and companies will reduce payments to the budget in order to help their businesses survive
  1. The decline of sales, budget revisions and revisions of investment plans will lead to new layoffs
  1. Banks will cut their financing and put pressure on loans being repaid rather than reschedule loans
  1. The value of Romanian assets will decline, which will lead to lower guarantees
  1. The collapse of European funds will be the biggest loss if the European Union withdraws the funds available to Romania that the country has not used
  1. Romania will remain the prisoner of the IMF and of the international financial markets
  1. The collapse of the middle class, which will leave public sector workers and pensioners as a critical mass likely to be influenced for election purposes
(English version by Daniela Stoican)
Subiecte #DECLINE#ECONOMY#POLITICS