Abstract
The recent Romanian parliamentary elections, held on November 30 2008, were
fiercely contested by the
two opposition parties, the Democrat Liberal
Party (PD-L) and the Social Democrat party (PSD).
Coalition talks are
likely to be protracted due to the small number of votes separating the two
parties -
meaning that either party will be capable of leading the next
government. However, we expect the
Democratic Liberals to be the dominant
party in the new government. We believe that a Democrat Liberal
led
government is the most attractive option for ensuring Romania' s long-term
political stability and
economic growth. Not only did the party campaign
on implementing the raft of anti-corruption reforms
which have been
advocated by the European Union, but it is also the most committed on pushing
ahead
with Romania' s convergence to EU norms. In addition, a Democratic
Liberal party government would
lead to a change in the style of Romanian
politics, as it will substantially reduce the friction between the
legislature and the executive. The two branches of power will no longer be
forced to cohabit, but will be
able to work together. This is likely to
speed up reforms and lead to a more harmonised approach to
policy
making.
The Romanian defence industry will continue on its restructuring
and privatisation programme. Having
seen dramatic redundancies in the
recent past, including the loss of 61% of the workforce between 2002
and
2003, the period will witness a further reduction within the Romanian defence
industry. However, the
losses should level out towards the end of the
forecast period. The long-planned privatisation seems to be
underway and
the Romanian Ministry of Economy and Commerce is receiving offers for the
RomArm
group of companies. Arms imports will increase during the period as
Romania seeks to make the armed
forces more efficient through the
procurement of new systems, such as the C-130 Hercules. At the same
time,
exports will generally rise as Romania attempts to return to being a large
player on the international
market. In summary, the period will witness
the Romanian defence industry hasten its transition from
centrally planned
to market industry (as the sector is set to be privatised) some time near the
back-end of
the forecast period.
In recent developments, the interior
ministries of Serbia, Bulgaria and Romania signed a protocol in
September
2008 on the joint fight against crime. The protocol is designed to improve
police cooperation
in the fight against crime, which is necessary since
the security risks which the three countries face are
inter-connected. The
protocol will particularly extend to cooperation in the fight against
cross-border
crime, drug smuggling, money counterfeiting, illegal
migration and economic crime, and, above all, the
smuggling of excise
goods, such as cigarettes and oil.
Following the latest data release from
the Romanian National Institute of Statistics, we have revised our
2008
and 2009 economic growth forecasts for Romania to 7.8% and 5.3% (from 5.6% and
5.1%),
respectively. While we expect growth to slow over our five-year
forecast period, we nevertheless
anticipate that it will remain fairly
robust, averaging 5.8% through to 2012.
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