Fitch: Romania’s Economy Looks More Like Overheating Than Expected In January

The Fitch official cited Romania’s strong first-quarter gross domestic product growth, of 8.2%, high inflation at 9.04% in July and the ratings agency’s upward revision for Romania’s expected current account deficit, which is seen at 17% of GDP this year, from the previous forecast of 16.5% of GDP.

"Another thing that has changed is the deterioration in the world economy. Fitch has revised down its forecast for euro area GDP growth, Romania’s main trade and investment partner, to 1.9% this year and 1.7% for 2009, from 2.1% and 2.4% last October. A shift in investor risk appetite could see the RON fall sharply, adding to inflationary pressure and, if the fall is sharp enough, destabilizing the economy and financial system – a "hard landing," Colquhoun said.

Fitch rates Romania "BBB" for long term debt in foreign currency, and the country’s outlook was revised to negative from stable in January, largely due to a ballooning current account deficit.

Iordania primește 29 de copii din Gaza pentru tratament medical

13:27

Călin Georgescu vrea referendum pentru ieșirea României din UE și NATO: „Este un fel de sclavie”

13:27

"The Negative Outlook also signals our concern that if the economy does not soon adjust to a more sustainable growth path involving lower inflation and a narrower current account deficit, the country’s external finances will start to look weak relative to ‘BBB’ peers as external debt and financing needs climb, which could add to pressure for a downgrade even if no hard landing occurs,” the Fitch official added.

Apart from Fitch, rating agency Standard&Poor’s also revised Romania’s outlook to Negative last year.

Starting 1998, Romania’s ratings have been successively improved and Fitch, Standard&Poor’s and Moody’s all rate Romania in the low risk category.

Standard&Poor’s rates Romania "BBB minus", Fitch Ratings – "BBB", and Moody’s Investors Service – "Baa3". The ratings of Standard&Poor’s and Moody’s are the lowest in the investment grade category, as defined by the two rating agencies. Any downgrade from these levels would leave Romania outside the group of countries presenting low risk for investors.