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Romania, 10 States In C, E Europe May Be Vulnerable To A Hard Landing- Moody’s

Rating agency Moody's Investors Service included Romania, alongside other ten states in the Emerging Europe, among countries whose sovereign rating might be vulnerable to a rapid and difficult economic adjustment, according to a report published Thursday.
Romania, 10 States In C, E Europe May Be Vulnerable To A Hard Landing- Moody’s
29 mai 2008, 10:32, English

The report identifies three groups of countries, differentiated by the potential impact of a hard landing on sovereign ratings.

"Macroeconomic stress has been gradually building across Emerging Europe and is starting to reach critical levels. Several years of current account deficits and rapid credit growth have left a number of countries vulnerable to a rapid and difficult economic adjustment, a so-called hard landing," explains Kenneth Orchard, a Moody’s Vice President – Senior Analyst and author of the report.

The first group includes countries whose rating would be resilient to a severe but unlikely hard landing: Iceland, Estonia, Bulgaria, Kazakhstan and Czech Republic.

The second group includes countries whose rating may come under moderate pressure, namely Romania, Poland and Croatia while group 3 is comprised of the countries whose ratings would be under significant pressure: Hungary, Latvia and Lithuania.

The term “hard landing” is used when the economy goes directly from a period of expansion to a recession, which might happen if a government or monetary authority is more restrictive in its fiscal or monetary policy than what is appropriate for the economy.

Moody’s Investors Service rated Romania at Baa 3, outlook stable.