CFA Romania: Slow disinflation process expected

The Macroeconomic Confidence Indicator of the CFA Romania Association shows that most respondents expect a decrease in the inflation rate compared with the current level, however, they also anticipate that the disinflation process will be slow, said Adrian Codirlasu, the organisation's president.'The level of the indicator and both of its components continue to signal recessionary conditions. It is noteworthy, compared with the previous survey, that expectations for the budget deficit have increased substantially. Also, for the first time in this inflationary cycle, the majority now anticipate a fall in the inflation rate compared with the current level, however, they also expect the disinflation process to be slow. Fiscal policy remains the main risk factor for inflation next year,' Adrian Codirlasu is quoted as saying in a press release on Monday.According to CFA Romania, the Association's Macroeconomic Confidence Indicator rose marginally (by 0.3 points) in September. Its two components evolved in opposite directions: the expectations component increased by 2.8 points to a value of 37, while the current conditions component fell 4.8 points to 38.6.The expected inflation rate for the 12-month horizon (September 2026) increased compared with the previous month, reaching 7.18%, with 63% of participants anticipating a decline in the inflation rate compared with its current value.Regarding the EUR/RON exchange rate, around 88% of participants expect the leu to depreciate over the next 12 months, while the rest foresee stability. The average expected exchange rate for the six-month horizon is 5.1216 lei per euro, and for the 12-month horizon, 5.1841 lei per euro.As for residential property prices in cities, 61% of participants anticipate stagnation over the next 12 months. Additionally, 50% consider that current prices are overvalued, while 46% believe they are fairly valued.The projected state budget deficit for 2025 has increased significantly compared with the previous survey, reaching an average expectation of 8.6% of GDP.Economic growth expectations for 2025 stand at an average of 0.8%, with some participants also predicting a possible recession in Romania's economy. Public debt, expressed as a percentage of GDP, is expected to rise to 59% over the next 12 months.An additional question included in the survey referred to expectations regarding a possible downgrade of Romania's credit rating to non-investment grade ('junk'). According to the results, 83% of participants anticipate that Romania will remain within the investment-grade category over the next 12 months.The survey, conducted monthly by CFA Romania for more than 14 years, serves as an indicator designed to quantify financial analysts' expectations regarding Romania's economic activity over a one-year horizon. It is carried out during the last week of each month among members of the CFA Romania Association and candidates for Levels II and III of the CFA exam.The Macroeconomic Confidence Indicator ranges from 0 (no confidence) to 100 (full confidence in the Romanian economy) and is calculated based on six questions concerning: current conditions, relating to the business environment and labour market; and expectations over a one-year horizon for the business environment, labour market, personal income at the economy-wide level, and personal wealth at the economy-wide level.In addition to the questions used to calculate the indicator, the survey also assesses one-year expectations for the inflation rate, interest rates, EUR/RON exchange rate, BET stock index, and global macroeconomic conditions.The CFA Romania Association is the professional body of investment specialists in Romania who hold the Chartered Financial Analyst (CFA) designation, a qualification administered by the CFA Institute (USA). CFA Romania is one of more than 160 members of the CFA Institute and aims to promote the interests of investment professionals while upholding high standards of integrity and professional excellence. The association currently has over 270 members holding the CFA designation.