Country Report Romania November 2008

Outlook for 2009-10

• No single party is likely to win a majority in the parliamentary election being held on November 30th.
• The opposition Social Democratic Party (SDP) won 28% of the vote in local elections in June and, after the parliamentary election, may be in a position to form a coalition government with the ruling National Liberal Party (NLP).
• The Democratic Liberal Party (DLP) may improve on the 28% of the vote that it won in the local elections and be chosen by the president, Traian Basescu, to form a government.
• A minority DLP government would face a large opposition in parliament, but may be allowed to function, in the interests of avoiding an early election.
• A DLP-NLP coalition cannot be discounted entirely, despite the recent history of bad relations between the two parties.
• The annual consolidated budget deficit is estimated at around 3% of GDP in 2008, as government spending rose steeply in an election year, but is forecast to fall gradually in 2009-10 as policy is tightened.
• After estimated real GDP growth of 8.6% in 2008, the effects of the global economic crisis and a necessary policy tightening will slow growth to below 3% in 2009, and only a modest acceleration is expected in 2010.
• Consumer price inflation is forecast to fall gradually, from an estimated 7.9% in 2008 to 5.8% in 2009 and to 4.2% in 2010.
• After stabilising at an estimated 13.4% of GDP in 2008, the current-account deficit is expected to narrow gradually in 2009-10 to around 10% of GDP.

Monthly review

• Opinion polls have the two main opposition parties, the SDP and the DLP, running neck and neck a month before the election.
• A government decision to delay an unfunded 50% increase in teachers' pay that had been approved by parliament sparked strikes ahead of the election.
• The National Bank of Romania (NBR, the central bank) had to intervene in the foreign-exchange market to defend the leu against speculative attack in October.
• Romania's sovereign credit rating has been downgraded by several international ratings agencies.
• The current-account deficit expanded by almost 15% year on year in euro terms in January-September 2008.

Source: Country Report

This report covers the following industry codes:
SIC Code: 49;70;10;60
NAICS Code: 22;72;212;52