Economic overview - November 2009
 |
16 Decembrie 2009 |
 |
RAIFFEISEN BANK S.A. |
Adresa
Piaţa Charles de Gaulle, Nr. 15
011857 Bucureşti, Sector 1
Telefon
+40-21-306.10.00
+40-21-306.16.22
Fax
+40-21-230.07.00
Website
www.raiffeisen.ro
Highlights
- Decline in real GDP eased in Q3 2009. GDP fell only by 0.6% from Q2 2009 when in contracted by 1.1% from the previous quarter. Decline in annual terms eased to 7.1% yoy in Q3, coming better than expected (-9% yoy). The positive surprise came from the increases in gross value added in agriculture (+15.1% qoq) and in inventories. Otherwise, the data were in line with the expectations. Both household expenditures and investments contracted further in Q3 2009, although at a smaller pace.
- The first indicators available for the fourth quarter were mixed. In October, industrial output increase again (+0.2% mom), while retail sales and output in construction further decreased (-1.9% mom and -4.4% mom respectively). However, we think that activity would most likely bottom up this quarter, while the recovery should be very slow.
- Annual inflation rate increased from 4.3% yoy in October to 4.7% yoy in November. Increase in the tobacco prices was the main driver of the monthly inflation rate from November (+0.7% mom). Advance in CORE 3 measure of inflation remained low in November, which suggests low underlying inflation pressures.
- Leu exchange rate remained stable in recent month even though depreciation pressures had increased at the beginning of October.
- On 6 December, Traian Basescu won the second round of presidential elections by a narrow margin of 50.33%. Now, the Democratic Liberal Party tries to form an alliance to back the new government in Parliament.
Key events of the month
Traian Basescu won a second mandate in presidential elections on 6 December
Traian Basescu and Mircea Geoana fought for the presidential seat in the second round of presidential elections on 6 December. Traian Basescu was backed by the Democratic Liberal Party (PD-L), while Mircea Geoana, the head of the Social Democratic Party (PSD), received also the support of the other parties (PNL, UDMR, PC, PRM).
There was a tight race between the two competitors. Although Sunday night exit polls showed a slight lead for Geoana, the final count on Monday showed that Basescu won the elections by a narrow margin of 50.33%, taking 70,048 more votes than Geoana. Social Democratic Party has challenged the results of the elections, but the Constitutional Court rejected its appeal.
The population also strongly agreed with Basescu's proposals for a parliament with only one chamber and with lower number of seats in Parliament.
The incentives for Basescu and PD-L to try to pass in parliament a government ruled by PD-L have increased, after the victory in the presidential elections. This is difficult, but not impossible. Even though the PD-L has only 35.5% of the seats in Parliament the party could reach an agreement with the independents, the party of Hungarian minorities and the representatives of other minorities gaining another 14.3%. In this case, it remains to obtain only few votes from the PSD and PNL for the new government. However, the weak support in Parliament for such a government would impede over its capacity to take key measures. This is why the PD-L still tries to have an alliance with PNL. The alternative two scenarios - early parliamentary elections and a government backed by an alliance between the PSD, PNL and UDMR - seem to have low chances at the moment.
The political turmoil is already lasting for a long period of time. The country is ruled by an interim government since the beginning of October. Unfortunately, the political parties are not very concerned about the negative consequences of the political instability. Romania failed to receive in time the instalments form the IMF and the EC due for Q4 2009, which would be postponed for Q1 2010.
OPINII
