Romania, among the most vulnerable emerging European states

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Alongside Latvia, Croatia, Lithuania, Turkey, Estonia and Bulgaria, Romania counts to the European emerging states that are most vulnerable to pressure related to external financing, shows a ranking worked out by financial assessment company Fitch.
The ranking grounds on the countries' current account balance of foreign payments due in 2008 and on the external debt.
 
According to Fitch, outlooks for emerging European economies and credits are worsening under the combined effect of global slowdown, strong inflationist pressure and frail financial conditions, at a time when many emerging countries also have a wide current account deficit.
 
The high current account deficit causes concern over the financial performance of emerging European states on the background of the subprime mortgage crunch that affected global economy.
For this reason, in January, Fitch revised downwards from "stable" to "negative" the ratings of Romania ("BBB"), Bulgaria, Estonia and Latvia.
 
Fitch also revised downwards its GDP growth projection for the emerging European countries from 6.9% in 2007 to 5.8% in 2008 (the lowest such figure since 2002) and 5.3% in 2009, grounding its estimations on a 7.5% growth in Russia's GDP this year. Many states in the region will see a more modest growth and Estonia and Latvia could even face a recession.
High and volatile inflation enhances the exchange rate and banking crisis risk and reduces debt tolerance.
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