February 24 (SeeNews) - CFA Romania, an association of investment professionals, said on Friday that the state of the country's economy is expected to worsen in the next 12 months.
Romania's January macroeconomic confidence indicator decreased to its lowest level since September, 54.9 points, which is 6.4 points down from the previous month.
The low score is mainly the result of the negative perception of the current economic situation, an indicator which fell by 11.3% points in January to 63.6 points, its lowest level since February 2016.
The analysts' expectations for the next 12 months in regards to Romania's economic situation dropped to 50.5 points in January, down by 4 points compared with December.
Romania's Social-Democrat led government has been many times warned by state officials and financial institutions that the 2017 state budget is unrealistic. The budget bill, approved by the parliament earlier this month and endorsed by president Klaus Iohannis despite his reservations is built on projections of 5.2% economic growth and deficit equivalent to 2.99% of gross domestic product (GDP).
The local unit of international consultancy KPMG Romania recently said in a report that the government is walking on a thin line by trying to achieve this economic growth. KPMG noted that Romania's 2017 state budget is built on both sound economic forecasts and on less stable elements such as the EU funds component or consumption.
The European Commission forecasts a 4.4% economic growth for Romania in 2017, while the World Bank forecast that Romania's economy will expand in at 3.7% this year.
CFA analysts said they are expecting, on average, inflation of 1.50% in the period February 2017- February 2018, similar to the rate projected in January.
Romania swung to annual inflation of 0.1% in January following 0.5% deflation in December. 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 4.5 lei per euro in the next six months and of 4.51 lei per euro in 2018, up 100 pips from the previous survey.
Also, 60.9% of analysts said they expect global economic conditions to be normal, while 26.1% expect an unfavourable situation and only 13% are optimistic.
The CFA Society Romania Macroeconomic Confidence Index, first released by CFA Society Romania in May 2011, represents 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 = 4.5169 lei)