Daily Newsletter - 17 January 2023


FIC (1)
Macroeconomic (4)
Financial (3)
Investment (3)
Legislative (2)
European News (1)
Social (2)
A vital criterion for large investors remains the stability, predictability and transparency of the legislative framework

A vital criterion for large investors remains the stability, predictability, and transparency of the legislative framework, as also highlighted by the latest edition of the Business Sentiment Index (BSI) published by the Foreign Investors Council. This criterion was not met for the measures taken by Romania in the energy domain, most of them being adopted in 2022 through emergency ordinances without the necessary time to consult with the parties involved. Although important market players are making major efforts to adapt to new regulations, compliance and implementation are becoming increasingly burdensome given the tight deadlines, multiple changes over the past year and imperfections in the legislation, and thus the functioning of the market is affected. FIC reiterates the need for a predictable legislative framework and consultation with the business environment to reach the best solutions to ensure energy security, protecting vulnerable consumers and the viability of all actors involved in the energy sector, and at the same time, member companies’ openness for dialog with state authorities to provide analyses and the expertise of professionals from private sector. We continue to be the partners of the Government in identifying sustainable measures to overcome the energy crisis, but also to ensure Romania’s economic development.

FIC: Important investments in the energy system are needed in order to ensure energy security and independence in the future

FIC: Important investments in the energy system are needed in order to ensure energy security and independence in the future

Two-thirds of economists surveyed at WEF in Davos expect a global recession in 2023
Two-thirds of private and public sector chief economists surveyed by the World Economic Forum (WEF) in Davos expect a global recession in 2023, the event’s organizer announced on Monday, as business representatives and government officials gathered for the annual event in the Swiss ski resort. About 18% of those surveyed consider a global recession is "extremely likely", more than twice as many as in the previous survey, conducted in September 2022. On the other hand, only a third of respondents think a recession is unlikely this year.
The fragmentation of global economy could lead to an up to 7% decrease in global GDP
The International Monetary Fund (IMF) warned on Sunday, 15 January 2023, that severe fragmentation of the global economy after decades of increasing economic integration could reduce global economic output by up to 7%, but the losses could reach 8-12% in some countries. Even limited fragmentation could cancel 0.2% of global GDP, but more work is needed to assess the estimated costs to the international monetary system and the global financial safety net (GFSN). Global flows of goods and capital stabilized after the global financial crisis of 2008-2009, and a surge in trade restrictions was seen in subsequent years.
Inflation is slowing, but there are still many risks for financial markets
The latest data on inflation gave investors more confidence to adopt a riskier approach, according to a press release. As a result, global markets have recovered some of last year’s losses. But 2023 still poses some risks related to the economic and geopolitical situation arising from what happened in the previous year. According to the cited source, the latest data on annual inflation in Romania for December 2022 shows a slight deceleration, to 16.4%. However, prices still grew by 0.4% month-on-month. 2022 was a year of high inflation, with a 1.3% average monthly price increase, compared to 0.7% in 2021.
Budget deficit at the end of 2022 was 5.84%
The head of the National Agency for Fiscal Administration (ANAF), Lucian Heiuș has announced that the budget deficit at the end of 2022 was the one estimated at the beginning of the year, namely 5.84%, pointing out that the institution he coordinates collected over RON 60 billion, compared to 2021. The specialist has also said that 2023 is a rather complicated year, with a lot of external factors that may influence the economic environment and the economic sector’s activity in Romania. Lucian Heiuș is certain that if the fiscal and economic policy is wise and prudent, Romania will manage to get through 2023 and stay within the deficit of 4.4% of GDP.
UniCredit Bank listed this year’s first corporate bond issue on BSE on Monday, 16 January
UniCredit Bank, part of the Italian group UniCredit, listed the first corporate bonds issue of 2023 on Bucharest Stock Exchange, worth RON 488.5 million, on Monday, 16 January 2023. The bonds will be traded on the Regulated Market of Bucharest Stock Exchange, under the stock exchange symbol UCB27. UniCredit Bank issued and sold to ten legal entities a number of 977 senior unsecured corporate bonds with a nominal value of RON 500,000 and maturity on 21 December 2027. The offer was brokered by Alpha Bank.
Ministry of Finance borrowed RON 2.2 billion from banks through bonds maturing in 2032
On Monday, 13 January, the Ministry of Finance borrowed RON 2.2 billion from banks through an auction of government bonds with a nominal value of RON 500 million, maturing in February 2032, at an interest rate of 7.68% per year. Eight primary dealers participated in the auction. Total demand amounted to RON 2.56 billion, of which banks bid RON 2.49 billion on their own behalf. The coupon rate was 6.7% and the yield to maturity for the average auction price was 7.67%.
Sergiu Oprescu has been appointed Vice President of the European Mortgage Federation
Sergiu Oprescu, the Executive President of Alpha Bank Romania and General Manager of Alpha Bank Group International Network, has been elected Vice President of the European Mortgage Federation (EMF). In this position, Sergiu Oprescu will collaborate with the newly elected President, Roberto Colomer Blasco, and with the other members of the EMF’s Executive Committee. This is the first time an Eastern European representative has been elected to the European Mortgage Federation’s leadership.
Maxagro Group invests EUR 10 million in a feed factory and in irrigations
Maxagro Group, owned by brothers Ianco and Ioji Zifceak, which grows cereals conventionally on 10,000 hectares and organically on 1,800 hectares in Timis County, plans to invest EUR 10 million in irrigation systems and a feed factory in 2023. Ianco Zifceak, a shareholder of Maxagro, has stated that RON 50 million had been invested in technology and machines in 2022.
BMW is considering a major new investment in Mexico
German carmaker Bayerische Motoren Werke (BMW) is planning a new major investment in the central Mexican state of San Luis Potosi, where the company already has a plant, Mexican Foreign Minister Marcelo Ebrard said Friday. A day earlier, Ebrard and President Andres Manuel Lopez Obrador had said BMW was investing around EUR 800 million (USD 866.64 million) in San Luis Potosi, without specifying whether it was a new outlay in Mexico.
Energy Minister invites Masdar and Taqa to invest in Romania
On Sunday, 15 January, Energy Minister Virgil Popescu discussed with representatives of Masdar and Taqa, about investments in renewable energy production and the development of energy transport infrastructure. He told the two companies’ representatives that he encouraged them to make investments in the field of gas-based energy production. He pointed out that Masdar representatives were already in technical talks with Hidroelectrica representatives with a view to investing in renewable energy production.
Draft law on special pensions reform will be debated under urgent procedure
The latest meeting of the Senate’s Standing Bureau decided that the draft law on the reform of special pensions would be debated within an urgent procedure, which would shorten some deadlines, such as the one for notifying the Constitutional Court of Romania (CCR). After having delayed the draft law on special pensions, which passed the Government in the last days of 2022, the Ruling Coalition requested, and the Standing Bureau of the Senate agreed with the urgent procedure regarding the draft law. As a result, some deadlines will be much shorter than in the normal procedure. For example, in the case of a referral to CCR by those discontented with the form the special pension law, the deadline for challenging it is just two days, not five days as in the normal procedure.
The acceptance of e-payments responds to consumers’ growing demand for digital services
The acceptance of electronic payments by more merchants from 2023 onwards, thanks to the new provisions of the Cashback Law, responds to consumers’ growing demand for digital services and will contribute both to increasing financial inclusion through the development of e-payment infrastructure in rural areas and small towns, and to combating the underground economy. On 16 November 2022, the Chamber of Deputies, as the decision-making body, adopted the Law approving Government Ordinance 16/2022, which amends the current legislation on the introduction of modern payment systems, known as the Cashback Law.
European News 
EU Commission’s Vestager proposes change to state aid rules
The executive vice-president of the European Commission, Margrethe Vestager, on Friday (13 January) proposed a ‘"Temporary Crisis and Transition Framework" for state aid. If implemented, the framework will allow member states to more easily subsidise renewable energy technologies and to implement tax breaks for companies in strategic sectors that are at risk of diverting investments to third countries outside Europe. Vestager outlined her proposal in a letter sent to EU member state finance ministers on Friday (13 January) ahead of the ministers’ meeting on Monday and Tuesday in Brussels.
Unemployment rate in the euro area was stable in November 2022, at 6.5% of labor force
According to Eurostat data, the unemployment rate in the euro area was stable in November 2022, at 6.5% of the labour force, after having reached a record low in October 2022. Compared to the situation in November 2021, the unemployment rate decreased by 0.6%, thanks to the post-Covid economic recovery. This indicator reached its lowest level since Eurostat started publishing statistics in April 1998. The European Statistical Office’s data are based on the definition of unemployment used by the International Labour Organisation (ILO), which defines the unemployed as those who have been actively looking for work in the last four weeks and are available to start work in the next two weeks.
20,344 deaths were recorded in November 2022
20,344 deaths were recorded in November 2022 (10,558 men and 9,786 women), 1,151 fewer (694 men and 457 women) than in October 2022, according to data published by the National Institute of Statistics (INS) on Monday, 16 January 2023. By main cause of death, the most deaths in November 2022 were due to circulatory system diseases (11,152 people, accounting for 54.8%), tumors (3,797 people, accounting for 18.7%) and respiratory system diseases (1,696 people, accounting for 8.3%). Moreover, 13,205 babies were born in November 2022, 1,930 fewer than in October 2022.