OREANDA-NEWS. May 12, 2011. Renaissance Capital, the leading emerging markets investment bank, has published a new report by Charles Robertson, the Firm’s Global Chief Economist and Head of Macro-strategy, titled Thoughts from a Renaissance man: Romania’s second chance. Modest foreign debt, a low current-account deficit and economic reforms are set to make Romania one of the safest credits in Europe, according to the report.

Robertson expects Romania’s industry and exports to drive growth this year, and consumption to pick up in 2012 and accelerate in the following years as bank lending rises. A return to an investment grade credit rating is likely, according to the report, given the country’s current low debt levels and better twin deficit data, while EU membership continues to offer a supportive backdrop.

Despite Romania’s foreign debt rising rapidly up to 2008, its absolute levels of debt remain low enough, meaning there is a good chance that the country will experience another period of strong growth during 2012-2015, says Robertson.

He considers the implementation of IMF recommendations in Romania to be highly effective and expects this to continue under the new precautionary standby agreement. Much-needed reforms slashed the current-account deficit to 4% of GDP in 2010, and Robertson adds that it could halve in 2011 as exports are now rising by 30-40%.

On the fiscal side, the government aims for a deficit of 3% of GDPin 2012. Even if this is not met, the analyst assumes public debt will be less than 40% of GDP in 2012. The combined public and private sector debt total of 75-80% of GDP in 2011-2012, on Robertson’s projections, will be less than that estimated for Poland, half that of Hungary and dramatically better than the 240-280% of GDP ratios in Spain, Portugal and Greece, let alone the 300%-plus of GDP ratios in the UK and the US.

With a small current-account deficit as well, Romania is set to look like one of the safest credits in Europe. A credit rating rebound to investment grade from Fitch and Standard & Poor’s (to join Moody’s) should therefore come as no surprise, in Robertson’s opinion.

Renaissance Capital launched a new series of research notes by Charles Robertson, the company’s Global Chief Economist and Head of Macro-strategy, in February. Called Thoughts from a Renaissance man, the series of regular notes includes in-depth, on-the-ground analysis of emerging and frontier markets. This latest report, on Romania, follows Robertson’s recent meetings with Romanian state officials and businessmen in Bucharest.