Financial analysts expect the COVID-19 pandemic to strongly impact the economy till Q2 2021


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Financial analysts expect the coronavirus to make a strong economic impact until the second quarter of 2021, according to  a survey conducted in July 2020 by Romania’s chartered financial analysts association CFA Romania.

Romania’s economy is expected to end this year with a budget deficit of 8.3 percent and to shrink 4.4 percent. The average projected unemployment rate is 7 percent.

“Four questions have been added since April this year to the survey on the impact of the coronavirus crisis on the national economy, and the results for July 2020 are the following: the duration of the coronavirus economic impact – the majority of the respondents (over 69 percent) anticipate that it will be felt strongly until the second quarter of 2021; the state budget deficit anticipated for 2020 – the average projection is 8.3 percent (note that the survey was conducted before the budget adjustment); the real-terms GDP in 2020 – the average expectations are of a 4.4 percent slump; the unemployment rate at the end of 2020 – the average projection is 7.0 percent,” CFA Romania says in a press release.

Roughly 59 percent of the respondents believe that the changes in consumption or travel behavior will be long-lasting (to the tune of years).

Also, 44 percent of the respondents believe that the impact on certain economic sectors will last for the long term (to the tune of years), while 33 percent believe that the impact on other sectors will be permanent.

Among the solutions envisaged to get out of the crisis, the economic analysts pointed to investments in infrastructure, education and health, investments in technology and digitization, especially the digitization of public services, a better absorption of European funds and improving the efficiency of public-private partnerships.

In terms of the EUR/RON exchange rate, roughly 95 percent of the respondents forecast a depreciation of the domestic RON in the next 12 months (compared to the current value). The average anticipated exchange rate for a 6-month horizon is 4.9022, while the anticipation for a 12-month horizon is 4.9582 (individual anticipations varied between 4.8500 and 5.1500).

The anticipated inflation rate for a 12-month time frame (August 2021/August 2020) is 2.70 percent on average.

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