The report covers info as of January 07.

Moody’s rating agency changed the outlook of Romania’s government rating to positive from stable on December 11, while affirming the rating at Baa3. The agency notes at the same time the risks posed by the fiscal easing and wage potentially rising faster than productivity.

Romania’s GDP increased by 3.6% y/y in Q3, in line with flash estimates, the statistics office announced on December 4. The growth rate thus accelerated from 3.4% y/y in Q2.Growth was driven in Q3, on the utilisation side, by household consumption (6.3% y/y) – which stimulated imports (3.1% up y/y) and - on the formation side - the value added accumulated in the sector of services (trade, car repair, logistics and horeca – 8.9% up y/y).

The president of Romania’s independent Fiscal Council, Ionut Dumitru, has expressed doubts about the sustainability of the 4% growth expected next year. Growth will ease in future, driven by the lack of investments, Dumitru explained.
Under the final version of its Autumn Forecast, the state forecasting body CNP projected the country’s GDP to gradually accelerate from 4.1% next year to 4.7% in 2019. The European Commission, in its Autumn Forecast dated November 6, expects next year’s 4.1% growth to ease to 3.6% y/y in 2017.

Key Points
• Moody’s upgrades Romania’s sovereign outlook to positive
• GDP up 3.6% y/y in Q3 on consumption, better tax collection
• Fiscal Council head questions sustainability of Romania’s record GDP growth forecast for 2016
• World Bank expects 3.9% growth this year in Romania
• Industrial output flat y/y in October after robust 4.3% y/y growth in Q3 (2.7% up y/y in Jan-Oct)
• Electricity consumption 6.2% up y/y in January-October
• Construction works in Romania up 9.7% y/y in October
• Retail sales rise by 15% y/y in Romania, in November
• CPI inflation shifts to negative 1.1% y/y in November from negative 1.6% y/y in October
• Net wages in Romania up real 11.6% y/y in October
• Romania says EU funds absorption surged to 74% in December
• Romania’s government posts 0.76% of GDP surplus in Jan-Nov
• Government endorses 2016 budget planning, Fiscal Council warns of fiscal slippage
• Central bank keeps monetary policy at 1.75%, cuts forex required reserves
• ECB issues opinion on controversial law on mortgage loans in Romania
• Bank loans in Romania 2.3% up y/y on 15.9% more mortgage loans at end-Nov
• US fund JC Flowers fails to take over Piraeus Bank Romania, abandons takeover plans for Carpatica
• C/A deficit widens by 85% y/y to €906mn in Jan-Oct