Research Detail
| 2022/09/08 / Erste Group Research |
End of summer blues for economy At this juncture, the economy has started to feel the heatwaves from multiple supply shocks, after shrugging them off and delivering whopping 5.8% y/y growth in 1H22. Given the strong first half of the year, we revised up our 2022 GDP growth estimate to 6.0%, from 5.1%. The risk balance to our call is skewed to the upside, due to the large fiscal impulse planned for the second half of the year. Core inflation continued to march north over the summer months, and it is expected to peak above 11% in December. The central bank turned dovish once headline inflation showed signs of plateauing, signalling a slower pace of key rate increases ahead and a willingness to end the hiking cycle in sync with peers, despite lagging them over the past year. The NBR’s dovish gyration was cheered by the ROMGBs market, which rallied aggressively, likely on covering underweight positioning by index trackers. The inflows from offshores into local government debt led to an even more unexpected rally for the RON, which hit a two-and-a-half-year high in early September against the EUR, despite the current account deficit, which continued to balloon, mostly driven by higher import prices. The government came up with a quite sizeable (given the fiscal headroom constraints) set of fiscal measures to support households and companies navigating the astronomic rise in energy prices. Despite rising fiscal burden pressures, there is a sense of a strong commitment to the fiscal consolidation path agreed with the EC. |
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General information
| Author | Erste Group Research |
| Date | 2022/09/08 |
| Language |  |
| Product name | CEE Country Macro Outlook |
| Topic in focus | FX, Macro/ Fixed income |
| Economy in focus | Romania |
| Currency in focus | Romanian Leu |
| Sector in focus | - |
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