(USD), which has a reduced parliamentary majority after the PNL left the government in February (see Volatility To Persist In Election Year , March -). The two opposition parties decided to join forces after receiving just -- and -- respectively in the EU elections, compared to --.- for the USD. ...The PNL s decision to leave the coalition in February will increase investor fears that the election could yet again leave the country with a President and Prime Minister from different parties and with opposing political views. The implications of such potential tensions were highlighted when Ponta attempted to impeach President Traian Basescu in mid-----, which led to a rebuke from the EU Commission as well as significantly diminished investor demand for Romanian assets. Keen to avoid another similarly strained relationship, Ponta released an unsuccessful statement after the EU elec- tions expressing hope that the PNL would re-join the governing coalition, with a view to keep Antonescu as the USD candidate. ...Although we will wait for both sides to finalise their nominations before trying to better forecast the outcome of the elections, it looks likely that policy uncertainty will suffer as the vote approaches.
...Meanwhile, Romania is likely to throw its weight behind further EU expansion in the region, to counteract the rising influence of Russia. Romania fully supported the EU s decision to invite Moldova to sign an association and free trade pact with the EU in June, with Basescu proposing that the agreement be signed a month earlier in the face of rising Russian opposition to the plans. ...Romania s proximity to the unrest raises the threat of spill over impacts of war, such as heightened refugee flows into the country from affected nations. On the economic front, we would have to downgrade our real GDP forecasts, as exports to Russia (a key trading partner) would suffer and rising investor risk aversion to the region would prompt investors to pull their money out of Romanian assets - Business Monitor International Ltd www political outlook external security threat rising Romania � Breakdown Of ST Political Risk Score (Out Of ---) Source: BMI. NB: Score of - represents high risk sliding Down the rankings ...On the economic front, we would have to downgrade our real GDP forecasts, as exports to Russia (a key trading partner) would suffer and rising investor risk aversion to the region would prompt investors to pull their money out of Romanian assets - Business Monitor International Ltd www political outlook external security threat rising Romania � Breakdown Of ST Political Risk Score (Out Of ---) Source: BMI. NB: Score of - represents high risk sliding Down the rankings
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