Brexit |Near-term impact on Romanian economy to be “subdued,” ING experts say

Newsroom 24/06/2016 | 13:43

A recent analysis by ING experts assesses that the impact of the UK’s exit from the European Union on the Romanian economy is likely to be “subdued.”

The reasons are twofold. Firstly, Romania’s recent GHD growth was triggered mainly by private consumption. Secondly, Romania has relatively low direct ties with the UK economy.

However, ING specialists argue, the medium-term and long impact of the Brexit on Romanian economy is likely to be significant, due to a domino effect. Namely, as per the Romanian Ministry of European Funds, Romania’s nominal GDP was 10.6 percent higher due to the EU money assigned as part of the 2007-2013 budget. Although it is difficult to come up with a scenario at this point in time, given that the UK contributed with around 11 percent of the total budget of the EU, the effects of the Brexit are likely to be felt.

Read how Romanian policymakers, economists and analysis reacted to the Brexit vote

Moreover, in the event the Brexit will trigger the weakening of the EU over the medium or long term, Romania will suffer due to a domino effect. Namely, Romania will be negatively affected from both an economic and a geopolitical point of view. In addition, ING experts assess, the results of the UK referendum could see the National Bank of Romania (BNR) delay its policy tightening to 1Q17, but this scenario is dependent on the response of the regional central banks as well as of the European Central Bank (ECB).

In an early reaction to the UK referendum vote, President Klaus Iohannis said there was no reason for concern regarding the Romanian economy. Iohannis called a meeting at Cotroceni Palace to discuss the aftermath of the UK referendum with PM Dacian Ciolos, BNR governor Mugur Isarescu and leaders of political parties.

According to the final referendum results, the Brexit camp won with 52 percent of votes. The turnout of the June 23 referendum was 72.16 percent.

Georgeta Gheorghe

BR Magazine | Latest Issue

Download PDF: Business Review Magazine March (II) 2024 Issue

The March (II) 2024 issue of Business Review Magazine is now available in digital format, featuring the main cover story titled “BAT DBS Romania Hub: A Vibrant New Office For An Employee-Centric
Newsroom | 27/03/2024 | 17:32
Advertisement Advertisement
Close ×

We use cookies for keeping our website reliable and secure, personalising content and ads, providing social media features and to analyse how our website is used.

Accept & continue