Bucharest, August 4th, 2016– Garanti Bank, one of the most dynamic banks on the local market, estimates that, the National Bank of Romania will not increase the monetary policy rate by mid-2017, according to the bank’s Quarterly Macroeconomic Report, corresponding to this year’s second quarter.
Given the international context, Garanti Bank expects that the low-interest rate environment will remain unchanged in the following months.
Internal consumption helped boost Romania’s GDP in the first quarter, the local economy having advanced by 4.3%. According to the forementioned report, the sectors that contributed mainly to this growth are domestic trade and transportation. Private services continued to performe well in the first quarter of 2016, with an overall contribution of 0.9 percentage points from the total growth.
Garanti Bank maintains its forecast regarding this year’s GDP growth, at 3.7%, and estimates a similar economic development in 2017. External demand is already decelerating and the outlook is sober given the current international vulnerabilities, according to the bank’s specialists.
The budget deficit was 0.1% in GDP during the first five months as opposed to a surplus of 0.9% last year in the same period. The negative fiscal balance was driven by the implementation of the new fiscal code (reduction in VAT) and public wage hikes.
According to the macroeconomic report, there are risks for the budget deficit to exceed the 3% level in 2017 as more measures are to be adopted in 2016, such as a 5% increase in public wages, as of 1st of August.
“The EU’s economic landscape is getting trough some important changes. Nevertheless, Romania has managed to keep a positive evolution, with an inflation below the line, a budget deficit smaller than expected and important economic drivers like the IT sector, trade and transportation on an upward trend”, stated Ufuk Tandogan, CEO Garanti Bank Romania.
Romania’s macro stability parameters are in good shape and, as such, the country’s investing grade rating was not affected by the international turbulences, in general, and Brexit in particular. Romania’s direct ties with UK are not very strong as the external trade shares are 4.4% in total exports and 2.5% in total imports, with the UK placed on 10th place in top FDI investors, while there is no investment in the banking system. Nevertheless, the indirect ties are stronger as the UK is the second largest economy in Europe and structural shifts will impact EU investors’ confidence and investment decisions, with immediate effects on the EU’s GDP and consequently on Romania’s GDP as well. Brexit event will likely trigger a shift in the global monetary conditions through a delay in Fed’s interest rate hikes while in the Eurozone and in the UK a further relaxation and lower interest rates are to be expected, according to the Quarterly Macroeconomic Report.
About Garanti Bank Romania
Garanti Bank is part of the financial-banking group Garanti Romania, which brings together Garanti Leasing (the brand under which the company Motoractive IFN SA operates) and Garanti Consumer Finance (the brand under which Ralfi IFN operates).
Garanti Bank is held by Turkiye Garanti Bankasi AS (TGB), Turkey’s second largest private bank. TGB is a universal bank with leading presence in all business lines. The bank serves more than 14 million customers in corporate, commercial, SME, and consumer segments offering fully integrated financial services. In July last year, Spanish financial group Banco Bilbao Vizcaya Argentaria (BBVA) gained majority management control of TGB.
Garanti Bank Romania offers a series of quality products and services for all business segments: retail, SME and corporate.
Present in Romania since 1998, the bank has developed a solid portfolio of clients and expanded its national presence through branches and alternative channels, reaching an extended network of 84 branches and over 300 intelligent ATMs that can be used by anyone, not just bank customers, for transactions with or without cards.
Garanti Bank was awarded in 2015 by world-renowned magazine Global Finance, as “Best Consumer Digital Bank in Romania” and “Best Integrated Consumer Bank Site in Central and Eastern Europe Region”. The distinctions were granted within the “2015 World’s Best Consumer Digital Banks in Central and Eastern Europe Competition”.
In May this year, International Rating agency Fitch Ratings affirmed the long-term IDRs of Garanti Bank Romania (GBR). The bank’s long term IDR was affirmed at ‘BBB-‘ (outlook stable), its short term IDR at ‘F3’, its Support Rating at ‘2’, while its Viability Rating was also affirmed at ‘b+’. Fitch emphasized that GBR remains a strategically important subsidiary of its parent bank.
