“We may have a recession”

The current situation is very complicated economically, the risk of recession has increased significantly and it is possible to have a slight recession this year, said on Monday, Adrian Codirlașu, president of the CFA Romania Association, at a meeting with the press.

‘The current situation is a complicated one, even very economically complicated. If we look at the domestic part, we have an extremely high budget deficit, with pressures to remain as high, if no fiscal consolidation measures are taken, we have a high current deficit, and if we look at the external situation, we have a war on the border and just what started a commercial war. So the environment both internal and externally are difficult. Under these conditions, the risk of recession would say that it has increased significantly. So it is possible to have a slight recession this year. What could change to lead us to a harder recession? It would be a relegation of Romania in the rating category not recommended to investments. If we actually look at the economic foundations, such as the two deficits, the current account and the budget, they remove us from the rating category recommended for investments. In case we are downgrade? Yes, we can expect a severe recession, which comes in the package and with higher interest rates and the depreciation of the lion ‘, explained Adrian Codirlașu.

Asked when we could see more clearly if Romania would face a recession this year, he said that the answer could come in the first part of it.

‘As figures, when we see the first digit of GDP for the quarter one. I would not be surprised if it were easily negative, because practically, until the elections, I do not think that investors will take great steps to invest in Romania. Therefore, we could see in the first half year this slightly negative evolution of the economy, and after the elections it will matter to keep this rating how credible the government fiscal policy will be. That will be the same government or a new government, but the credibility of the fiscal policy will be essential. Again, what the rating agencies say, the fact that they keep us in the rating category recommended for investments, is precisely the fact that they are members of the European Union and we take European money. So it is essential to take European money and stay with pro -European policies. That is, a transfer to Euroscepticism I think will certainly lead us to rating not recommended to investments, « said Adrian Codirlașu.

The budget for the current year is built on an economic growth of 2.5% and a budget deficit of 7% of GDP.

The CFA Romania Association is the organization of investment professionals in Romania, holders of the Chartered Financial Analyst (CFA), qualification administered by CFA Institute (USA).