CFA Romania analysts anticipate budget deficit of 6.4 pct of GDP in 2021

Financial analysts anticipate this year's budget deficit will be 6.4 percent of GDP and the inflation rate over a 12-month time horizon, respectively June 2022 - June 2021, to be 3.75 percent, Romania's chartered financial analysts association CFA Romania said in a release. At the same time, none of the survey participants predicts a decrease in the inflation rate in the next 12 months. As regards the euro/leu exchange rate, over 93 percent of the survey participants anticipate a depreciation of the national currency in the next 12 months (compared to the current value), with no appreciation response for the leu. Thus, the average rate over a 6-month horizon stands at 4.9653, while for the 12-month horizon the average value of the forecasted exchange rate is 5.0183 lei for one euro. "It is noteworthy that 84 percent of survey participants anticipate an increase in the inflation rate. Also, 60 percent of participants anticipate an increase in residential real estate prices (the highest percentage in the last year)," the release said. Since April 2020, additional questions have been added to the survey on the impact of the coronavirus crisis on the national economy, and the May 2021 results show that, in terms of the duration of the economic impact of the coronavirus panedmic, most respondents (over 65 percent) anticipate that it will be felt even in 2022, while 22 percent of respondents anticipate the impact to last until the fourth quarter of 2022. The average value of the expectations regarding the evolution in real terms of the GDP in 2021 is 6.4 percent. The public debt as a percentage of GDP will reach, in a 12-month horizon, approximately 54 percent, and Romania's euro area accession horizon is 2030. "The confidence indicator continued to reach new highs after the Covid-19 crisis. This development is consistent with the increase in economic growth expectations for 2021, to over 6 percent. However, the increase in domestic demand, combined with external factors, will lead to an increase in inflation rate," said Adrian Codirlasu, vice-president of the CFA Romania Association. The Macroeconomic Confidence Indicator of the CFA Romania Association increased compared to the previous month to 74.5 points, a 6-year peak (compared to the same month of the previous year, the indicator increased by 38.4 points). Also, the current conditions component of the indicator rose by 19.5 points compared to the previous month. The survey has been conducted monthly by the CFA Romania Association for almost ten years, and is an indicator quantifying the financial analysts' expectations as regards the one-year horizon economic activity in Romania. The Macroeconomic Confidence Indicator comprises values ranging between 0 (lack of confidence) and 100 (full confidence in the Romanian economy) and is calculated based on six questions on the current conditions related to the business environment and the labor market and the expectations for a one-year horizon for the business environment, the labor market, the evolution of personal income at the level of the economy and the evolution of personal wealth at the level of the economy. AGERPRES (RO - author: Nicoleta Banciulea, editor: Andreea Marinescu; EN - author: Simona Iacob, editor: Simona Klodnischi)