Abstract
The sharp fall in Romanian real GDP growth to 2.9% in Q408 (from 9.1% in Q3)
supports our view that
the country will head into recession in 2009. We
forecast real GDP to contract by 3.2% in 2009, as
external demand for
Romanian goods falls, capital inflows slow and consumer and business
confidence
weakens, weighing on domestic consumption. In line with our
regional view, we expect the outlook for
Romanian economic activity to
begin to improve in 2010, but growth is projected to recover only to an
average 4.2% between 2011 and 2013.
The Romanian economy expanded by 2.9%
year-on-year (y-o-y) in Q408, significantly below the 9.1%
and 9.3%
figures seen in Q3 and Q2, respectively. While the country recorded an
impressive annual
growth rate of 7.1% in 2008 - the highest in the
European Union - and just 0.1 percentage points (pp) off
BMI ' s growth
estimate of 7.0%, the sharp reversal in Q4 in the real GDP growth rate trend
underlines
our view that Romania will head into recession in 2009. Going
forward, we forecast Romanian real GDP
to contract by 3.2% in 2009, a much
more bearish figure than that projected by either the National Bank
of
Romania (NBR) or the government. The Romanian Finance Minister Gheorghe Pogea
stated on
March 12 that the government expects between a 1.0% contraction
and 1.5% expansion in 2009, while
NBR Governor Mugur Isarescu forecasts
that growth will expand by 1.2%. Romanian economic activity
will be
negatively impacted by the interrelated factors of regional deleveraging and
aggregate demand
destruction.
In Central and Eastern Europe (CEE), we
profile 22 multi-national insurance companies. In alphabetical
order,
these are AEGON, AIG, Allianz, Aviva, AXA, Cardif, ERGO, Eureko, Fortis,
Generali,
GRAWE, Groupama, HDI-Gerling, HSBC Insurance, ING, MetLife,
Prudential Financial, QBE,
RSA, UNIQA, Vienna Insurance Group and Zurich
Financial Services.
We also discuss the regional presence of Belgium' s KBC
and Austria' s Erste Bank through a number of
insurance subsidiaries and
explain the importance, for each of the various countries, of purely
domestic
firms.
We estimate that, over the course of 2008, total
premiums in Romania rose by 25% to RON9,013mn.
Non-life premiums rose by
25% to RON7,176mn, while life premiums rose by 27% to RON1,837mn.
Between
now and the end of the forecast period, we expect that annual non-life
premiums will grow by
RON4,520mn, while annual life premiums should grow
by RON3,978mn. Growth in non-life premiums
should be driven by the general
growth of nominal GDP plus a rise in non-life penetration from the
current
level of 1.3% to 2.0%
Growth in life premiums should be driven by the
change in the overall population and a rise in life density
from US$27.29
to US$100.00 per capita.
BMI' s Insurance Business Environment Rating is
55.6.
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