CFA Romania expecting strong COVID-19 economic impact in Q1 2021

More than a third of CFA Romania analysts are expecting the economic impact of coronavirus to be felt strongly in Romania by Q1 2021, anticipating a government deficit of 7.8%.

"In the April 2020 survey, four additional questions were added regarding: the economic impact of coronavirus, with the majority of respondents (37.2%) anticipating that it will be strongly felt by the first quarter of 2021; the government deficit anticipated for 2020: the average value of expectations is 7.8%; real-term development of GDP in 2020: the average value of expectations is -5.2%; unemployment at the end of 2020: the average value of expectations is 8.3%," reads a CFA Society Romania press statement released on Tuesday.

Regarding the euro/leu exchange rate, over 90% of the respondents are anticipating a depreciation of the leu in the next 12 months as against the current value. Thus, the average value of anticipations for the 6-month horizon is 4.9180 lei to the euro, while the average 12-month horizon value of the anticipated exchange rate is 4.9710 lei to the euro.

The anticipated inflation rate for the 12-month horizon (May 2021 / May 2020) should average 3.37%.

In April 2020, the Macroeconomic Confidence Indicator of the CFA Society Romania association increased from the previous month by 11.6 points to 32.4 points; compared with the same month of the previous year, the indicator was down 14.2 points. This development was mainly due to the anticipation component of the indicator.

Thus, the Current Conditions Indicator increased by 1.4 points from the previous month to 14.6 points; compared with the same month of the previous year, the Current Conditions Indicator decreased by 45.3 points. The Anticipation Indicator increased by 16.6 points to 41.3 points; compared with the same month of the previous year, the Anticipation Indicator increased by 1.4 points.

The Macroeconomic Confidence Indicator was launched by the CFA Society Romania in May 2011 and is an indicator to quantify the expectations of financial analysts regarding economic activity in Romania for a period of one year. Also, the survey upon which the indicator is built includes questions related to the assessment of current macroeconomic conditions.