The report covers info as of October 27.

Romania’s economy prepares for robust growth of above 3% this year and even more in 2016. But the fiscal slippage risks are rising as the government is endorsing measures with significant impact on budget. The EC and IMF expect the deficit to widen toward 3% of GDP next year and exceed this threshold in 2017 under current fiscal regime. The public debt is around 40% of GDP and the exposure to volatile external financing conditions is moderate.

Romania’s macro-fiscal fundamentals are sound, and export growth has remained solid even in the context of weak external demand, the World Bank said in its economic outlook for the Europe and Central Asia region, Low Commodity Prices and Weak Currencies, released on October 26.

Romania’s GDP will accelerate to 3.9% y/y in 2016, from 3.4% y/y in 2015, according to the International Monetary Fund’s latest World Economic Outlook report, issued on October 6. The country’s economic advance would thus be the highest among European economies in 2016, after being significantly above the average (1.9%) this year.

But the IMF also warned on fiscal slippage risks. Romania's adopted and intended policies will push the country's fiscal deficit close to 3% of GDP in 2016 and above that threshold in 2017, unless offsetting measures are identified or capital spending is again not fully carried out, the International Monetary Fund warned in the statement issued at the end of a staff visit in Romania.

Key Points
• Romania’s government survives no-confidence vote
• S&P affirms Romania’s sovereign rating, issues moderate growth forecast;
• Romania wants flexible arrangement with IMF, no fiscal constraints; IMF warns Romania’s fiscal deficit is “set to rise significantly”
• IMF expects Romania’s GDP to accelerate to 3.9% y/y in 2016; medium-term growth seen at 3.3%
• Romania revises Q2 GDP growth to 3.4%, from 3.3%; GDP increased by 3.8% y/y in H1
• Romania’s industrial output 6% up y/y in August
• Construction work in Romania up 10.8% y/y in August
• Romania’s retail sales up 9.6% y/y in August on VAT rate cut for food
• Romania’s consumer prices 0.26% up m/m in September
• Romanian wages up 9.8% y/y in August – in new post-recession record advance
• General government posts 0.9%-of-GDP surplus in Jan-Sep ; Romania’s Fiscal Council warns of costly fiscal slippage in medium term
• Romania drafts second budget revision, keeps deficit target at 1.85% of GDP
• Romania’s current absorption of EU funds up only 2.2pp q/q to 57% at end-Sep
• Public debt-to-GDP ratio down 0.8pp to 37.5% at end-August under ESA
• Romania issues €2bn worth of 10-year, 20-year Eurobonds
• Romania keeps policy interest rate at 1.75% amid medium-term inflationary pressures
• Growth of mortgage loans in Romania accelerate to 14.3% y/y at end-Sep
• Loan-to-deposit ratio down to 92.2% in Romania at end-September on rising deposits
• Romania’s C/A deficit halves y/y to €585mn in Jan-Aug
• Romania’s trade gap widens by 94% y/y in August