Politics

Romania: A good old-fashioned EM overheating story

Good old fashion overheating and no rate hikes on the horizon. The new government led by Dacian Ciolos will be well received by investors, but is unlikely to change the economic trajectory ahead. Major fiscal stimulus, historically low borrowing costs but no major structural reform in the pipeline. We see real GDP growth heading for 5% in 2016/2017, no monetary tightening in the coming year and a stable currency against the euro.