Romania’s economy will probably contract by 5.7% this year, which is less than the average decline in the euro area, said Matthew Sherwood, senior economist of the Economist Intelligence Unit, in the first online conference focused on Romania organized by the British financial magazine The Economist.

However, Romania will also see a slower recovery, of only 4% in 2021, and will return to the 2019 GDP level only in 2022, Sherwood added, according to local Agerpres.

He explained that this crisis has caught Romania better prepared financially than in 2009, but that the country has a tight fiscal space and lower institutional capacity to address this crisis.

Sherwood also said the configuration of the local political scene is also very important. „We expect the center-right parties, led by the Liberals, to win the general elections on December 6 and form a majority coalition,” he said, adding that a majority Government will make a big difference.

Romania needs a majority coalition to solve its current problems, according to Sherwood, who pointed to the major risk that the country’s sovereign rating is downgraded because of populist measures adopted by the Parliament.

andrei@romania-insider.com

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