CFA Romania analysts warn of looming stagflation and leu depreciation
The CFA Romania confidence index fell sharply in August, prompting analysts to flag a risk of stagflation and a weaker leu against the euro.
The Association of CFA Romania reported a sharp decline in its monthly Macro-Economic Confidence Indicator for August, with the fall attributed chiefly to deteriorating expectations about the economy’s trajectory. Experts warned that Romania faces a stagflation scenario, where high inflation persists amid stagnant output. The majority of surveyed analysts anticipate the leu will depreciate against the euro within the coming twelve months, while GDP growth is expected to hover around zero and public debt as a share of GDP to increase.
Inflation is projected to stay elevated, though a slight easing is foreseen. The survey also highlighted concerns about overvalued residential property prices and uncertainty in global oil markets.
