Romania's CFA Macroeconomic Confidence Index dips in March

Romania's CFA Macroeconomic Confidence Index dips in March Business sentiment Romania

BUCHAREST (Romania), April 26 (SeeNews) - CFA Romania, an association of investment professionals, said on Wednesday that the state of the country's economy is expected to slightly worsen in the next 12 months.

The CFA Society Romania Macroeconomic Confidence Index for March decreased by 0.1 of a point compared to the previous month, reaching 56.8 points, CFA said in a monthly survey.

The decrease was mainly due to a slightly more negative perception of the current economic situation, an indicator which fell by 0.2 of a point to 67.7 points.

Romania's economy is expected to grow by 4.2% in 2017 before expansion slows to 3.4% in 2018, according to the IMF's latest economic forecast issued in April. The 2017 budget bill is built on projections of 5.2% economic growth and sets deficit equivalent to 2.99% of GDP, a target that many find too ambitious.

In 2016, Romania's economy expanded by 4.8% year-on-year compared to a revised growth rate of 3.9% in 2015. The country's consolidated budget showed a deficit equivalent to 2.41% of the projected GDP last year, compared to 1.47% of GDP in 2015, according to finance ministry data.

CFA analysts said they are expecting, on average, inflation of 1.80% in the period March 2017- March 2018, up 0.30 of a percentage point from the rate projected in February.

Romania's annual inflation rate was 0.2% in March, at the same level as in the previous month, according to data from the national statistical office. In its latest inflation report issued in February, Romania's central bank, BNR, lowered its 2017 inflation forecast to 1.7% from previously projected 2.1%.

The analysts expect an exchange rate of 4.5685 lei per euro in the next six months, up 185 pips from the previous survey and 4.6 lei per euro in 2018, up 400 pips from February.

On March 17, Romanian leu weakened the most against the euro since October 2012, prompting analysts to think the central bank, BNR, might have increased its tolerance towards downward pressure on the domestic currency. On that day, BNR set its reference exchange rate at 4.5654 lei per euro, the lowest exchange rate for the Romanian currency since October 24, 2012, when it reached 4.5754 lei per euro.

Some 63% of CFA analysts said they expect global economic conditions to be normal, while 18.5% expect an unfavourable situation and 18.5% are optimistic.

The CFA Society Romania Macroeconomic Confidence Index, first released by CFA Society Romania in May 2011, repr​esents an indicator that aims at quantifying financial analysts' expectations about economic activity in Romania for a time horizon of one year.

The Index takes values between 0 (no confidence) and 100 ​(complete confidence in the Romanian economy) and is calculated based on six questions regarding current conditions of business and labor market; expectations about business, labour market, personal income and personal wealth.

(1 euro = 4.5355 lei)


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