News

Daily Newsletter - 29 October 2021

Summary

Macroeconomic (3)
Financial (3)
Investment (4)
Legislative (1)
European News (2)
Social (2)
Macroeconomic 
Florin Cîţu has stated that all the necessary resources will be allocated upon the budget adjustment
Interim Prime Minister Florin Cîţu has stated that no one will suffer and all the necessary resources will be allocated upon the budget adjustment. The reaction came following a question about the impossibility of an interim Government to perform the budget adjustment. Florin Cîţu has reminded that last year the budget was made in February; therefore it would not be a problem if things happened the same this year. However, this is not an optimal option, which is why the interim Prime Minister has requested PSD and USR to show that they really want Romania to overcome this political crisis.
Romania’s fiscal consolidation will be supported by the connection to the excessive deficit procedure
Romania’s fiscal consolidation will be supported by the connection to the excessive deficit procedure, and the nominal GDP’s high growth rate over the next 12-18 months will support the reduction of the budget deficit even if the implementation of structural reforms is delayed, Karen Vartapetov, Lead Analyst at S&P Sovereign Ratings for Central and Eastern Europe, stated during a webinar organized by the rating agency. Romania has been in an excessive deficit procedure since 2020 due to the 4.3% budget deficit from 2019, while the country committed before the European Commission to gradually reduce the budget deficit to less than 3% of GDP in 2024. In the first nine months of this year, the budget deficit stood at 3.77% or RON 44.3 billion in nominal terms, a better position compared to analysts’ expectations.
Managers of enterprises in Romania estimate a sharp rise in construction and retail trade prices
Managers of enterprises in Romania estimate a sharp rise in construction and retail trade prices, as well as relative stability of activity in the manufacturing industry, retail trade and services, according to data published by the National Institute of Statistics (INS) yesterday. According to a survey conducted in October 2021, managers in the manufacturing industry expect relative stability of the production volume for the next three months (-5% short term balance). Moreover, a significant advance (short term balance + 59%) has been estimated for the manufacturing of coke oven products and products obtained from crude oil processing
Financial 
The value of loans granted by INFs reached a record level of over RON 37.5 billion at mid-2021
The value of loans granted by non-banking financial institutions (INFs) reached a record level of over RON 37.5 billion at mid-2021, after a 6.7% advance in the first six months, compared to the same period of 2020, according to KeysFin’s latest analysis. In 2020, loans granted by IFNs recorded in the General Register grew by 2.3%, to RON 35.2 billion. However, in December 2020, they were 4% below the record high level of RON 36.8 billion reached in December 2008. Unlike the banking sector, IFNs mainly grant loans to non-financial corporations (77% versus 46% in the case of credit institutions, according to data from the end of Q1/2021), the analysis indicates.
UniCredit SpA has improved its estimates regarding revenues and profit for 2021
UniCredit SpA, Italy’s second-largest banking group, has improved its estimates regarding revenues and profit for 2021, after having reported quarterly results above expectations yesterday, following lower losses from loans and higher revenues. The group’s net profit grew to EUR 1.06 billion (USD 1.23 billion) in Q3 of 2021, while analysts had expected EUR 838 million. Revenues also increased by 19%, to EUR 4.44 billion, during the period July - September 2021, while net interest income was up 3.1%, amid growing transactions, especially in Eastern Europe.
Fitch Ratings has revised Erste Group Bank AG’s outlook to stable from negative
Fitch Ratings has revised Erste Group Bank AG’s outlook to stable from negative and has affirmed the bank’s ratings, including the Long-Term Issuer Default Rating (IDR) at "A" and Viability Rating (VR) at "a", according to a press release issued by the rating agency. The revision of the outlook reflects Fitch’s updated economic assumptions for the bank’s main operating countries, reflecting sufficient rating headroom to absorb residual pandemic-related risks. Fitch expects strong forecast economic recovery in Erste’s core region will support the group’s asset quality and operating profitability, which we expect to remain close to their four-year average in 2021-2022.
Investment 
Morris International is investing USD 100 million in its Otopeni plant
Cigarette and tobacco manufacturing company Philip Morris International (PMI), whose name is linked to the Marlboro brands and to the new IQOS tobacco heating device, is to invest USD 100 million in the plant in Otopeni during the period 2022-2023. This year, the company has invested another USD 100 million in the same production unit, where it produces consumables for IQOS, the electronic tobacco heating system developed by the company.
Dr. Leahu Dental Clinics have opened the largest clinic in the network, in Cluj-Napoca
Dr. Leahu Dental Clinics have inaugurated the Regional Center of Excellence in Cluj-Napoca, following a process that lasted three years and which involved an over EUR 2 million investment budget. This is the company’s second investment in Cluj County, after the opening of the clinic in Turda. The clinic in Cluj-Napoca has a usable area of about 1,200 square meters and integrates 18 dental units, an operating room and intensive care capacity, 2 dental radiology centers, a dental laboratory and "Space Academy", a concept dedicated to services for children.
The project for the construction of a Hospital for Respiratory Diseases in Iaşi has been signed
On Thursday, 28 October, Iaşi County Council President Costel Alexe signed the public procurement contract for design services for the construction of the Integrated Clinical Hospital for Respiratory Diseases, as the current Hospital of Lung Diseases in Iaşi is in an advanced state of degradation. The construction of the new hospital in Iasi requires over EUR 100 million investments, and county leaders claim that the project will be carried out through the 2021-2027 Health Operational Program, the "Recovery and Resilience Facility" financing tool.
Optical store Lensa has opened its 14th showroom, in Arad
The online and offline optical store Lensa has announced that it opened its 14th showroom, in Arad, on Thursday, 28 October. At the end of 2021, Lensa.ro’s total investments in the expansion of physical stores will get close to EUR 2 million. The new store in Arad has an area of 105 square meters, with two units where free eye examinations will be offered and hundreds of products from several brands. The range of lenses is also quite wide, as the portfolio includes all major suppliers.
Legislative 
The National Liberal Party has proposed a new draft law
The MPs of the National Liberal Party have proposed a draft law through which public work contracts offered by city/town halls and County Councils, which have already been decided through tenders, can be modified if the tariffs of necessary materials have increased. PNL deputy Dumitru Flucuş has transmitted that, through this legislative initiative, mayors receive a helping hand from the Parliament in order to be able to continue the important projects in their communities. The Liberal has indicated that many projects that have already been started are in danger of being suspended due to the increases in prices of building materials, fuels or labor.
European News 
Interest in vaccination against COVID-19 has increased significantly in Romania over the past week
Interest in vaccination against COVID-19 has increased significantly in Romania over the past week, amid discussions about making green passes mandatory for some activities, and overfilled hospitals. The number of doses administered in Romania has remained above 100,000 per day over the past days, a sharp increase from around 10,000 a day just a month ago. The fourth wave of the COVID-19 pandemic has hit Romania hard, which has now one of the highest death rates in the world. Less than four in 10 adults are vaccinated in the country, well below the average of the EU of over 75%.
Economy ministers welcomed the assessment of recovery plans for Estonia, Finland and Romania
Economy and finance ministers welcomed the assessment of national recovery and resilience plans for Estonia, Finland and Romania. European Council implementing decisions on the approval of these plans will be adopted by written procedure shortly after ministers’ video conference on Thursday, 28 October. Following the formal adoption of the decisions, those member states will be able to receive the requested 13% pre-financing and begin making use of the EU’s large-scale financial support to overcome the adverse impact of the pandemic on their economies. The EU’s recovery fund makes €672.5 billion (in 2018 prices) available to support reforms and investments member states make to stimulate their economies, while prioritizing green and digital spending.
Social 
Children in Romania are most exposed to the risk of poverty and social exclusion in EU
Children in Romania are most exposed to the risk of poverty and social exclusion in the European Union. 41.5% of them are at risk, compared to the 24.2% EU average, according to data presented by Eurostat yesterday. According to the report analyzing the situation in 2020, almost a quarter (24.2%) of children in the EU were at risk of poverty and social exclusion, compared to 21.7% of adults (aged 18-64) and 20.4% of the elderly (aged 65 and over). The highest shares of children in this situation can be found in Romania (41.5%), Bulgaria (36.2%), Spain (31.8%) and Greece (31.5%). The lowest shares of children at risk of poverty and social exclusion were recorded in Slovenia (12.1%), the Czech Republic (12.9%), Denmark (13.5%) and Finland (14.5%) last year.
Interim Deputy PM Kelemen Hunor announced that new aid from Hungary would arrive in Romania
Interim Deputy Prime Minister Kelemen Hunor announced on Thursday, 28 October, that new aid from Hungary would arrive in Romania, consisting of ventilators, non-invasive ventilation masks and 3,000 boxes of Favipiravir. According to him, saving human lives and reducing pressure on the healthcare system remains authorities’ most important task, and the Hungarian Government is a partner of the country in this endeavor.