Strategy Romania

31 Martie 2011

RAIFFEISEN BANK S.A.

 

Highlights

Economic recession proved to be deeper and longer than initially expected. Most likely, the bottom has been reached. We are looking for a gradual recovery in activity in the next period.

Macroeconomic imbalances are adjusting. The current account deficit moved to 4% of GDP. Fiscal policy was set on a sustainable path. The budget deficit was lowered after the enforcement of several key austerity measures in 2010.

Unwelcome developments in food and oil prices on the external markets, as well as in local administered prices might put the inflation rate on a path threatening the inflation expectations and central bank's inflation targets. This would not allow the central bank to cut the key interest rate in the next quarters.

Provided that there is no slippage in public policies, we expect the Romanian leu to appreciate against euro marginally in nominal terms in the coming quarters. A slight nominal appreciation would in fact translate into much larger appreciation in real terms, given the large inflation differential against the euro area.

We expect a fundamentally positive development on the Bucharest stock market over a one-year horizon. Investors' attention is now turning more and more to the long-term growth perspectives which the country offers to its companies and investors.

 

Politics

Still risks for structural reforms

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The tricky lag LUCIAN CROITORU Adviser to the Governor - BANCA NAŢIONALĂ A ROMÂNIEI Lucian Croitoru, Adviser on monetary policy issues to the National Bank of Romania Governor, talks about the NBR’s next moves and explains why the decrease ofthe policy rate hasn’t been reflected into lower interest rates on bank loans. mai mult... The turnaround CRISTIAN SPORIS Secretar de Stat - MINISTERUL ECONOMIEI ŞI FINANŢELOR Cristian Sporis, Secretary of State at the Ministry of Public Finance, in charge with the national treasury and public debt, explains how the state managed to borrow money at the lowest costs in the last seven years and how it turned from a clear market taker into a player with a strong position on the market. mai mult...