CFA Romania: The main short-term risk for Romania's economy is the risk of being downgraded to the non-investment category

  The main short-term risk for Romanian economy, in the context of unsustainable twin deficits, there is a risk of being downgraded to the junk category, according to Adrian Codirlasu, president of CFA Romania.'In the context of unsustainable twin deficits, the main short-term risk for the Romanian economy is the risk of being downgraded to junk status. This risk is closely linked to the necessary fiscal consolidation requested by the rating agencies to bring the budget deficit within the sustainability zone within a reasonable timeframe,' he said, according to a CFA Romania press release .   In March, the Macroeconomic Confidence Indicator of the CFA Romania Association rose by 7.3 points to 43.9 points, which was due exclusively to the increase in the expectations component of the indicator, while the current conditions component remained relatively similar to the value recorded in the previous year.   A supplimentary question introduced in the survey made monthly by CFA Romania refers to anticipations regarding Romania’s downgrading in the category of junk status. According to the results, 82% of the participants anticipate keeping, for the next 12 months, Romania in the category of recommended for investments, while 18% anticipate downgrading in the junk category.By comparison, statistically speaking, when an issuer's outlook is revised from 'neutral' to 'negative', one in three issuers is downgraded in the next 12 months. Also, the weaker the rating (e.g. BBB-, BB+), the higher the risk of downgrading after a negative outlook, CFA Romania's specialists explain.   The projected state budget deficit for 2025 remained similar to the previous year, at an average forecast of 7.4% of GDP.   The economic growth expectations of CFA Romania's specialists for the year 2025 are lower than in the previous year, averaging 1.0%, and there are also opinions among the participants regarding a possible recession of the Romanian economy. Public debt as a percentage of GDP is expected to increase to 58% over the next 12 months.   Also, according to the survey, the expected inflation rate for the 12-month horizon (April 2026) has decreased compared to 4.85% in March and reached 4.65%. As regards the EUR/R RON exchange rate, about 79% of participants expect the leu to depreciate over the next 12 months, while the rest expect the exchange rate to stagnate. Thus, the average value of expectations for the 6-month horizon is 5.0311 lei for one euro, while for the 12-month horizon, the average value of the EUR/R RON exchange rate is 5.0735 lei for one euro.   As regards the evolution of residential property prices in cities, 61% of participants anticipate stagnation over the next 12 months, while 29% anticipate a decrease. In addition, 74% of participants believe that current prices are overvalued and 21% that they are correctly valued.   The survey has been made monthly by the CFA Association Romania for over 13 years, and represents an indicator through which the organisation wants to quantifiy the anticipations of financial analysts with regard to economic activity of Romania for a horizon of one year. The survey is made in the last week of each month, and the participants are members of the Associaton CFA Romania and candidates for levels II and III of the CFA exam.The Macroeconomic Confidence Indicator takes values between 0 (lack of confidence) and 100 (full confidence in the Romanian economy) and is calculated on the basis of 6 questions on: current conditions - regarding the business environment and the labour market; expectations for a one-year time horizon for: the business environment, the labour market, the evolution of personal income at economy level and the evolution of personal wealth at economy level.   In addition to the questions needed for the calculation of the Macroeconomic Confidence Indicator, the survey also assesses expectations, also for a one-year time horizon, for the inflation rate, interest rates, the EUR/RON exchange rate, the BET stock index and global macroeconomic conditions.