Foreign analysts’ opinions on Romanian developments are excessively pessimistic, anticipating the worsening of the problems that challenge the country at present, the Association of Romanian Financial-Banking Analysts (AAFBR) said in a release remitted to Rompres.
"Such hasty evaluations are the more so concerning as they occur at a moment of quite high investor sensitivity to all emerging countries," reads the cited document.
Of late, some foreign analysts were anticipating a widening of the foreign deficit by 17 – 18 pct, the increase of the National Bank’s monetary policy interest rate beyond 12 pct per annum, the depreciation of the local currency, the leu, to less than 4 lei per euro and a weakening of the banking system’s soundness to the red-alert level. One of the problems confronting Romania and that is being recurrently tackled in the opinions expressed is that of the foreign imbalance that has widened in the last year to 13.9 pct of the GDP.
"Despite that, certain rating agencies or international experts’ predictions about a gap of 17-18 pct or even more are just over-reactions that take less into account the realities of Romanian economy or exclude particular elements with a temporary character specific to the first year after EU accession," continues the document.
A relevant example is the speeding up of the trade balance deficit in 2007, that underpins the expansion of the current account deficit triggered by a set of factors such as the delay in 2006 imports on the background of customs duties being removed, changes in the methodology for the registration of imports from the EU and an unsustainable appreciation of the national currency in the first part of 2007.
AAFBR considers that a linear pattern for the estimation of the increase of Romania’s current account deficit is inapplicable, given the low probability of occurrence of the aforementioned factors.
More than that, the evolutions in Q1 show a significant slowdown in the widening of the trade balance deficit following a strong setback in imports and the concomitant boost in exports.
"These evolutions show an unexpectedly prompt response of Romanian economy to the return of the exchange rate to levels that more accurately reflect the competitiveness of the country’s economy," AAFBR considers.
The progressive tightening of the monetary policy by the rise of the key interest rate, supplementary administrative measures and maintaining the minimum mandatory reserve ratio at a high level materialized in the increase of bank interest rates on the short term.
"Yet, under the current circumstances, it’s hard to speak of a systemic crisis of the banking sector, as hold some foreign experts. Through the minimum mandatory reserve, 40 pct of the foreign currency resources and 20 pct of resources in lei attracted from the clients are placed into the central bank’s account. An extra need for liquidity in lei in the system could be eventually prompted by higher payments to the budget or sped up consumer credits in certain periods like the time preceding Easter," continues the release.
AAFBR considers the central bank has the necessary instruments to inject liquidity into the inter-bank market – an operation performed on a regular basis by all central banks in systems where they are net creditors. After all, the fact that BNR too might from now on get on the position of net creditor would be a sign of normalcy, AAFBR says.
This year might see a robust economic growth amid expectations of a global slowdown. The very good results over the first two months, like the boost in industry – particularly in capital goods industry – construction sector and exports, as well as retail sales, are encouraging signs for Romanian economy, that however still has lots to catch up on competitiveness with mature economies.