Romania: 1/3 of the Economy affected by the coronavirus pandemic

Romania: 1/3 of the Economy affected by the coronavirus pandemic

Minister of Economy Virgil Popescu told Bloomberg television that the coronavirus pandemic had affected one third of the Romanian economy, especially the tourism and automotive industry. He explained that, after the resumption of economic activity, Romania should focus on areas that had shown their potential even before the crisis erupted, namely energy, the petrochemical industry and defense. The Romanian authorities predict a decline of almost 2% in 2020, while economic analysts estimate that Romania will be among the European countries to feel the economic crisis to the core, with a public deficit amounting to 7.5% of GDP in 2020.

In addition, Moody’s rating agency confirmed the assessment of Romania’s public debt to BAA3 / A-3 for long-term and short-term debt in local and foreign currency and changed the outlook for Romania from stable to negative, as the ministry announced on Saturday. The maintenance of the score is justified by the country’s strong growth potential despite the coronavirus pandemic, as well as by the Romanian state’s moderate institutional capacity. The change in perspective took into account the structural deterioration of public finances, caused by the increase in long-term debt after the reform of the 2019 pension system, as well as the deterioration of Romania’s external position.

Fitch also downgraded the outlook for the Romanian economy from stable to negative on 17 April. /ibna