The Macroeconomic Confidence Indicator produced by CFA Society Romania fell sharply in June this year, ahead of the tax hike and/or the downgrading of Romania’s credit rating, and the current level indicates a very high risk of recession, says Adrian Codirlasu, president of the organization.

„In the anticipation of the tax hike and/or the downgrade of Romania’s credit rating, the confidence indicator dropped sharply. The current level indicates a very high risk of recession. And a possible recession is compounded by a rise in the inflation rate, driven by higher indirect taxes. An extremely unfortunate combination stemming from the strongly pro-cyclical fiscal policy pursued in recent years,” Codirlasu explained in a press release issued on Thursday.

The monthly survey conducted by CFA Society Romania, aimed at gauging financial analysts’ expectations regarding the country’s economic activity, also included an additional question on the likelihood of Romania being downgraded to junk status. Thus, according to the results, 88% of the participants expect Romania to remain in the recommended investment grade credit rating category over the next 12 months (up from the previous year), while 11% expect Romania to be downgraded to junk, down significantly from the previous year.

According to CFA Romania, statistically, a revision of an issuer’s outlook from ‘neutral’ to ‘negative’ leads to a downgrade within 12 months in approximately one-third of case. Moreover, the weaker the credit rating (e.g., BBB-, BB+), the higher the higher of a downgrade following a negative outlook.

Under these conditions, the Macroeconomic Confidence Indicator posted a sharp decline in June, falling by 14.9 points to 29.9. The drop was driven by significant losses in both of its components: the expectations component fell by 16 points to 25.0, while the current conditions component dropped by 12.8 points to 39.7 — a level typically associated with recessionary conditions.

The anticipated inflation rate for the 12-month horizon (July 2026) increased compared to the value recorded in the previous month, reaching 5.35%. However, the statement notes that the survey was conducted during the last week of June, before the finalization of the fiscal package, at a time when public authority messages suggested maintaining the standard VAT rate at 19%.

Regarding the EUR/RON exchange rate, approximately 82% of respondents expect a depreciation of the leu over the next 12 months, with no opinions indicating an appreciation. As a result, the average anticipated exchange rate for the 6-month horizon is 5.0961 RON per euro, while for the 12-month horizon, the average anticipated rate is 5.1453 RON per euro.

As regards the evolution of residential property prices in cities, 52% of respondents anticipate stagnation over the next 12 months, while 35% expect a decline. Additionally, 65% of participants believe that current property prices are overvalued, while 35% consider them to be fairly valued.

Estimates for the state budget deficit projected for 2025 have slightly decreased compared to the previous survey, with the average forecast now at 7.5% of GDP.

Economic growth expectations for 2025 have also declined slightly, with the average estimate at 0.9%. Some respondents also expressed concerns about a potential recession in the Romanian economy.

AGERPRES