The ratings on Romania balance our view of the country's strong economic growth potential and moderate general government debt against its limited administrative capacity, relatively low prosperity and high, if declining, levels of external debt. We expect the Romanian economy will stage a modest recovery in 2011 and strengthen steadily thereafter. In our view, growth will be muted in the short term owing to continued fiscal adjustment and household deleveraging, both of which will weigh on private consumption. External demand should, however, provide a positive boost to corporate investment and exports. We forecast that the current account deficit will narrow slightly in 2011 as domestic demand remains subdued, but then widen as private consumption strengthens. That said, we believe it
