Political and judicial conflict could intensify in Romania, between the executive and the judiciary, but also with European institutions, foresees UniCredit Bank in its most recent report on Romania.

The lender expects an economic slowdown, to an economy growth of 4.4% in 2018, and 3.6% in 2019.

A fiscal conflict could emerge from the loose fiscal policy, also stemming from the risk of budget deficits exceeding 3% of the GDP in 2018-2019. Extra populist expenses cannot be supported without widening budget deficits, or increasing taxes, writes UniCredit.

The bank mentions the net salary growth slowdown with the decision to move tax payment fully to employees starting the beginning of 2018. This hidden tax hike will however not be enough to keep the budget deficit under 3%, notes the lender, as the social security expenses increase came with a drop of the income tax from 16% to 10%.

editor@romania-insider.com