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FP Portfolio Manager Meyer: One-off chance for Romania to shine this year despite economic slowdown

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Romania has a one-off chance to shine this year, despite an economic slowdown compared to the previous years, says Johan Meyer, CEO of Franklin Templeton Investment Management Limited UK Bucharest Branch and Fondul Proprietatea co-Portfolio Manager.

"30 years after the fall of the communist regime, Romania seems well anchored to the European values and on a clear path of economic development. Despite certain persisting issues as regards the latter subject, Romania has the opportunity to start the new decade on the right foot, leaving behind the damage control of the previous years. The messages of the new government on numerous subjects of interest to investors, from repealing the harmful legislation and promoting listings, to encouraging corporate governance and the transparency of state-owned companies, are the first steps for the country to regain its credibility as a reliable business partner and investment destination. So, can 2020 really mark a positive change for Romania, after a hectic and extremely confusing 2019? The simple answer is yes. There is consensus that Romania will see the seventh consecutive year of economic growth, of 3.6 percent of GDP. Romania has the one-off chance to shine this year, even if the economic growth rate is slowing down compared to the previous years. However, there are some key conditions for this to happen," Meyer said in a statement.

According to him, the watchword of the year is caution. With a 2020 budget deficit optimistically put by the government at 3.6 pct of GDP, in contrast to the European Commission's more moderate expectations, the government will have to be very cautious with spending.

Johan Meyer notes that the repeal of the "infamous OUG No. 114" is a good start to repair the damage caused to the perception of Romania as an attractive investment destination. The measure should be accompanied by ensuring legislative and regulatory stability and predictability, so that the companies be able to confidently invest again in the long-term.

According to the cited source, Standard & Poor's downgrading the country's rating at the end of last year seemed to put the seal on a period marked by a series of economic mistakes and mishaps. However, if the government is sufficiently prudent in spending and efficient in collecting taxes, there is the possibility to regain a more favorable rating.

Johan Meyer points out that apart from energy, tourism will also be a star this year, given the continuous improvement of Romania's reputation and the facilities offered to visitors.

According to the Fondul Proprietatea co-Portfolio Manager, more foreign investments are expected this year, whether in energy, tourism or other fields.

"In conclusion, 2020 has the potential to be more settled in certain areas - a return to a deregulated energy market, the reduction of budget spending, but more dynamic in others - the legislation regulating Black Sea offshore projects, steps towards listing state-owned companies, transparent appointments in these companies, etc. As such, the current government has a unique opportunity to make sure that this year will indeed mark a change for the better," the document reads.


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