Romania could record a 2% economic growth in 2011 after two years of recession, and cut its budget deficit to 4.4% of GDP, but political risks remain high, Fitch rating agency believes.
"Despite the government's success in meeting the 6.8% deficit target for 2010, political risk remains high. Failure to implement sufficient budgetary consolidation would erode the country's creditworthiness," Douglas Renwick, director within Fitch Ratings, told ZF.
The IMF and the Romanian authorities expect a 1.5% economic growth for this year.
At the beginning of 2010 Fitch estimated that the economy would return to positive territory, forecasting 2% growth, but then modified the GDP forecast to -1%.
Fitch analysts are part of a longer list of economists who revise their estimate on the progression of the Romanian economy as they go. IMF forecasts for 2010 also went from a 1.3% growth (in January), to a 0.5% contraction, and then to minus 1.9% at the end of the year.
Renwick did not wish to comment on whether Romania's rating could be upgraded or downgraded, but said the failure to cut the budget deficit sufficiently quickly would put downward pressure on the rating, as would a suspension of the IMF programme; this would have a negative effect on confidence and the country's external liquidity.
In February 2010 Fitch rating agency upgraded Romania's outlook from negative to stable.
Romania could record a 2% economic growth in 2011 after two years of recession, and cut its budget deficit to 4.4% of GDP, but political risks remain high, Fitch rating agency believes.
"Despite the government's success in meeting the 6.8% deficit target for 2010, political risk remains high. Failure to implement sufficient budgetary consolidation would erode the country's creditworthiness," Douglas Renwick, director within Fitch Ratings, told ZF.
The IMF
