Chief economist Lucian Anghel of Banca Comerciala Romana (BCR) believes the Standard&Poor’s and other financial rating agencies having downgraded Romania’s ratings is unjustified because of the country’s macroeconomic performance compared with the performance of other emerging countries.
Anghel points to an economic growth of 8.3% in 2008, up from just 6% in 2007, and to fixed capital formation, which advanced 29.5% in 2008, year on year, up from 28.9% in 2007.
The BCR chief economist anticipates a slowdown in Romania’s economic growth in the remaining part of the year as a result of the world credit crisis.
“Given that the financial crisis will trigger narrowing current-account surpluses of the large oil exporters and the exporters of highly technological products globally, the emerging countries, including Romania, are expected to witness a narrowing of their current-account deficits as a ratio to the Gross Domestic Product,” Anghel explains.
2008 should see the beginning of a gradual correction of the current-account deficit, a trend that is likely to go on for many years, says Anghel.
Anghel also says inflation could reach only 6.2% in 2008 year on year, because there are various short-term factors able to fuel the deflation prices.
Anghel also says inflation could reach only 6.2% in 2008 year on year, because there are various short-term factors able to fuel the deflation prices.
The BCR chief economist also foresees a plummeting in the non-governmental credit particularly as far as forex loans are concerned.
For 2009, Anghel foresees successive cuts in the monetary policy rate of the National Bank of Romania (BNR), cuts that should be visible as early as the next first half year.
For 2009, Anghel foresees successive cuts in the monetary policy rate of the National Bank of Romania (BNR), cuts that should be visible as early as the next first half year.
On November 10, Fitch Ratings downgraded Romania’s long-term foreign currency IDR to ‘BB+’ Negative Outlook from ‘BBB’ Negative Outlook; the long-term local currency IDR was downgraded to ‘BBB-’ (BBB minus) Negative Outlook from ‘BBB+’ Negative Outlook, while the shortterm foreign currency IDR downgraded to ‘B’ from ‘F3’, wile the Country Ceiling downgraded to ‘BBB’ from ‘A-’ (A minus).
Two weeks previously, Standard&Poor’s Ratings Services lowered its long- and short-term foreign currency sovereign credit ratings on Romania to ‘BB+/B’ from ‘BBB-/A-3’, and its local currency long-term rating to ‘BBB-’ from ‘BBB’, reflecting the mounting risks to Romania’s real economy due to high and rising private sector leverage and the related dependency on an increasingly uncertain external financing channel.
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