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Romania Country Report - February, 2016

  • March 2016
  • -
  • Emerging Markets Direct Media Holdings
  • -
  • 36 pages

Summary

Table of Contents

EXECUTIVE SUMMARY

The report covers info as of March 11.



The key stories regarding Romania's macroeconomics at this moment are the sustainability of the high growth rates (3.7% y/y in 2015) and the impact of the datio-in solutum bill - a bill under which banks customers could abandon the mortgage contracts with no further liability in addition to the collateral.



There is little doubt that there was the consumption that pushed up GDP last year.

Consumption has contributed 4pp to the GDP growth in 2015, while gross fix capital formation only 1.8pp. Consumption increased by 5.3% y/y in full 2015 and accelerated to 6.4% y/y in Q4. The investments have increased since 2014, when they decreased by 3.1% y/y, but they remain at a low level both in absolute terms and as a percentage of GDP compared to the pre-crisis peak of 2008.



Key Points



oRomania raises EUR1.25bn upon re-opening 10-yr, 20-yr Eurobonds

oPublic debt to GDP ratio down 1.2pp y/y to 38.6% at end-2015

oGDP up 3.7% y/y in 2015, driven by consumption

oNet investments rise by 8.4% y/y in 2015 from low base

oIndustrial growth eases to 2% y/y in Q4; 2.8% y/y in full 2015

oConstruction works up 11.7% y/y in Q4; 10.4% up y/y in 2015 on maintenance, repair of roads

oRetail sales 15.6% y/y up in January; accelerates from 8.9%b y/y in 2015

oHeadline inflation plunges to minus 2.1% y/y in January on VAT rate cut and further sinks into negative area to minus 2.8% y/y in February, on energy prices

oC-bank governor considers monetary policy tightening

oWages surge by 11.1% y/y in Q4 and accelerates to 14.1% y/y in January

oRomania's banks achieve EUR1.1bn net profits in 2015, on EUR82bn assets

oBanks' profitability above EU average despite high NPL ratio, c-bank finds

oPwC expects Romanian banks to sell EUR2.5bn of NPLs in 2016

oOverdue loans to banks ease by 18% y/y to EUR4.6bn at end-January

oEBA NPL drops to 13.6% at end-2015, 7.1pp down y/y

oBanks extend EUR843mn new loans in January, 31% up y/y

oBIS-reporting banks cut exposure to Romania by 3.2% of GDP in 4Q ending Sep-15

oFOB trade gap widens 59% y/y to 3.6% of GDP in 2015

oExports shrink 1.6% by y/y, trade gap keeps widening in January

oGross external debt down by 2.2% of GDP in 2015, after hike in 2009-2014

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