Questions on securities

Monday - Friday 09:00-17:00

Quick guide

Choose your country

Research Detail

2022/06/10 / Erste Group Research

Muddling through, inflation is bliss for fiscal consolidation


After large historical GDP data revisions, including for the fourth quarter of 2021, adding an important positive carry-over effect, and a big upside surprise from first quarter GDP growth, we expect the consensus and official forecasts to align somewhere around 5.0% for 2022, from the 2-3% range before the 1Q21 GDP data release. This is likely to prompt the NBR to change its output gap assessment and subsequently lead to a more persistent elevated core inflation outlook. Nevertheless, the NBR is likely to lag behind its peers in tightening, though it committed to keep the interest rate gap vs. peers (Poland) unchanged going forward, while the EUR/RON exchange rate is becoming more of a nominal anchor. Inflation should help reduce the ratio between rigid government spending and fiscal revenues via real public sector wage deflation.

Similar to past crisis episodes, there is little-to-none fiscal headroom to support the economy, with rigid spending vs. fiscal revenues exceeding regional norms by a wide margin. The government came up with a set of fiscal measures to support the economy in navigating through the current difficult geopolitical context. Once again, the bulk of the measures address the demand side, with little support to supply-side potential growth drivers. In a no-policy-change scenario, the budget deficit is likely to overshoot the target, although we expect the government to come up with additional measures to fill the gap, as there is a sense of strong commitment to the fiscal consolidation path agreed with the EC.


PDF Download Download PDF (151kB)

General information

AuthorErste Group Research
Date2022/06/10
Languageen
Product nameCEE Country Macro Outlook
Topic in focusFX, Macro/ Fixed income
Economy in focusRomania
Currency in focusRomanian Leu
Sector in focus-
Download



Decline
Accept

We use cookies and web analysis software to give you the best possible experience on our website. If you consent, these tools will be used. For more details please read our Data protection policy.

INFORMATION FOR PRIVATE CLIENTS / CONSUMERS

Any information, material and services regarding financial instruments and securities provided by Erste Group Bank AG or any of its affiliates (collectively “Erste Group“) on this and any linked website hereafter (jointly the “Websites”) shall be exclusively to investors who are not subject to any legal sale or purchase restrictions (the “Interested Party“).

The publication and distribution of information as well as offering and selling of products and services described on the Websites is prohibited by law in some jurisdictions. For this reason, persons in countries in which the publication as well as the offering and selling of products and services described on the Websites are not permitted by law, must not enter the Websites and/or acquire the products displayed on the Websites.

Neither Erste Group nor any third party shall offer access to the Websites or offer the products to especially, but not limited to citizen/residents of the United States and “U.S. person” (as defined in Regulation S under the US Securities Act 1933 as amended). For this reason, the distribution or redistribution of the information, materials and products into United States or into any other jurisdiction where it is not permitted under the applicable law, as well as to the citizens/residents of these countries shall be prohibited. The securities displayed on the Websites have not been and will not be registered under the US Securities Act of 1933 and trading in the securities has not been approved for purposes of the US Commodities Exchange Act of 1936. For this reason the securities may, inter alia, not be offered, sold or delivered within the United States or, for the account and benefit of U.S. persons.

The Interested Party is solely responsible to examine, whether he may enter the Websites under the law applicable to it. Erste Group shall not be responsible for the distribution of content of any of the Websites to individuals or entities which provide false information about their right to enter the Websites. For this reason Erste Group shall not be liable for any legal claims or damages which may result from the unauthorized entering or reading of the Websites.

By agreeing to this hereto, the Interested Party confirms that
(i) It has read, understood and accepted this Information and the Disclaimer;
(ii) It informed itself about any possible legal restriction and warrants that it is not restricted or prohibited to enter the Websites according to any law applicable; and
(iii) It does not make available the contents of the Websites to any person who is not qualified by law to enter the Websites.