Erste Bank Research Team
Erste Bank
Consumption boom supports growth, but abroad More room to remove policy restrictiveness Additional supply weighs on sovereign debt performance EUR/RON should remain broadly stable in 2024, asymmetric risks.
The government pursued an agenda of raising public sector incomes in a heavy election year. Public sector wages increased by nearly 20%, while public pensions were hiked at almost double that pace. Consequently, the budget deficit topped 4.0% of GDP after seven months and the government updated its financing plans, corresponding to a budget deficit of 6.9% of GDP vs. 5.0% in the initial plans. With structural issues unaddressed, the boom in domestic consumption was almost entirely offset by a negative contribution from net exports to economic growth. State infrastructure investments are well underway and should start to pay dividends in the future.
European and local elections were held mid-year and opinion polls suggest a continuity of the grand coalition after the general elections due on December 1. The new government is expected to adopt measures to rein in fiscal slippage. The size of the fiscal adjustment depends on the starting point for the budget deficit for 2024. The speed of the fiscal consolidation is subject to negotiations with the European Commission. The structure of the fiscal corrective measures is likely to be mainly from the revenues side, given the rigid structure of the government spending. Fiscal adjustment on the revenues is less growth-negative than on the expenditures.
GDP (real,y/y)
This document is intended as an additional information source, aimed towards our customers. It is based on the best resources available to the authors at press time. The information and data sources utilised are deemed reliable, however, Erste Bank Sparkassen (CR) and affiliates do not take any responsibility for accuracy nor completeness of the information contained herein. This document is neither an offer nor an invitation to buy or sell any securities.
Recommended Content
Editors’ Picks
AUD/USD: A minor support emerges around 0.6480
AUD/USD added to Friday’s retracement, returning to the 0.6550 zone amid the persistent move higher in the US Dollar and the resumption of trade concerns. The Australian Dollar is expected to closely follow the release of critical hard data from China on Tuesday.
EUR/USD: Downward pressure losing impulse?
EUR/USD traded in the red for the fourth day in a row, this time retreating to three-week troughs in the mid-1.1600 on the back of the firmer tone in the Greenback and renewed trade effervescence between the US and the European Union.
Gold battling around $3,350 amid fresh tariffs’ threats
Gold prices maintain their bearish tilt around the $3,350 zone per troy ounce, leaving behind three consecutive days of gains. Fresh trade concerns seem to temper the precious metal’s decline, but investors remain cautious ahead of the publication of US inflation data on Tuesday and the US Dollar's continued strong tone.
Hyperliquid Price Forecast: HYPE eyes gains following Sonnet BioTherapeutics' rebrand
Hyperliquid (HYPE) trades near $48 on Monday following Sonnet BioTherapeutics' (SONN) announcement that it has entered a merger agreement with Rorschach I LLC to launch as a new HYPE treasury company, Hyperliquid Strategies Inc.
Five fundamentals for the week: Investors eye tariff circus and US inflation data Premium
Which country will be the next to receive a letter from America? US President Donald Trump has been extending his tariff threats through the weekend. Has the US economy felt the consequences of levies already imposed? These are the topics for another hot summer month.
Best Brokers for EUR/USD Trading
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.