EDITORIAL - Risks are present, but outlook remains positive
It also claims that the 2017 budget poses “significant uncertainty”. “The consolidation of a responsible fiscal policy, by securing greater predictability in the regulatory field, and the preclusion of a pro-cyclical behavior of the macroeconomic policy mix are crucial in preserving economic equilibria and underpinning financial stability in the period ahead. Fiscal space can be achieved, on the expenditure side, through improved EU funds absorption and wide-scale implementation of centralized public procurement procedures (particularly in healthcare) and, on the revenue side, via enhanced fiscal discipline at the level of both state- and privately-owned companies,” BNR said.
The report also tackles the United Kingdom’s vote to leave the EU, claiming it poses a moderate systemic risk. “The outcome of the forthcoming negotiations looks exceedingly uncertain at this moment and the first consequences of this uncertainty are already visible: the pound sterling lost nine per cent against the euro and 14 per cent against the US dollar from the referendum date to December 2016. At the current juncture, it is also difficult to estimate what and how large the Brexit implications on Romania would be.”
BNR’s report adds that the foreign-currency loan stock remains significant, but it has been decreasing, “as leu-denominated lending conditions have improved”, and emphasizes that the banking sector is “capable of dealing with adverse developments”. Looking at the macroeconomic environment, the BNR report notes that it has remained favorable, with Romania’s economy growing “at one of the highest rates in Europe, while external debt and public debt have stabilized”. However, it assesses the risks to macro-stability as significant. “Economic growth, which has primarily relied on domestic consumption, has also put pressure on the trade balance, while Romania’s fiscal position has worsened in 2016, potentially posing difficulties in terms of government deficit financing, since the local banking sector has already a high exposure to the government sector.”
And while all businesses hope for good results in the new year, Business Arena will continue to keep an eye on all the issues affecting the business community, reflecting its views, hopes and challenges. Meanwhile, as the end of the year is near, we would like to thank our readers for their valuable support, and wish everyone a Happy Holiday season and a peaceful and prosperous New Year.
The report also tackles the United Kingdom’s vote to leave the EU, claiming it poses a moderate systemic risk. “The outcome of the forthcoming negotiations looks exceedingly uncertain at this moment and the first consequences of this uncertainty are already visible: the pound sterling lost nine per cent against the euro and 14 per cent against the US dollar from the referendum date to December 2016. At the current juncture, it is also difficult to estimate what and how large the Brexit implications on Romania would be.”
BNR’s report adds that the foreign-currency loan stock remains significant, but it has been decreasing, “as leu-denominated lending conditions have improved”, and emphasizes that the banking sector is “capable of dealing with adverse developments”. Looking at the macroeconomic environment, the BNR report notes that it has remained favorable, with Romania’s economy growing “at one of the highest rates in Europe, while external debt and public debt have stabilized”. However, it assesses the risks to macro-stability as significant. “Economic growth, which has primarily relied on domestic consumption, has also put pressure on the trade balance, while Romania’s fiscal position has worsened in 2016, potentially posing difficulties in terms of government deficit financing, since the local banking sector has already a high exposure to the government sector.”
And while all businesses hope for good results in the new year, Business Arena will continue to keep an eye on all the issues affecting the business community, reflecting its views, hopes and challenges. Meanwhile, as the end of the year is near, we would like to thank our readers for their valuable support, and wish everyone a Happy Holiday season and a peaceful and prosperous New Year.
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