Brexit|Nomura downgrades Romania’s growth forecast by 0.2 pct

Newsroom 24/06/2016 | 18:50

Nomura experts downgrade Romania’s growth forecast by around 0.2pp, based on a baseline scenario of a 2 percent peak-to-through fall in UK output.

The analysis is part of Nomura’s assessment of the risk of Brexit on EEMEA. The Asia-based financial services group published the forecast in May and maintained the forecast after the results of the UK referendum were announced on June 24.

The forecasts had as a starting point a 2 percent peak-to-through decline in UK output. In the aftermath of the June 23 referendum, Nomura updated its UK forecast to include a recession in H2 of 2016, with a recovery projected to start towards the end of 2017.

According to Nomura, Hungary and Czech Republic’s growth will fall by 0.5 percent, Poland’s by 0.3 percent, Romania and South Africa’s by around 0.2 percent , while Turkey and Russia’s growth forecast by around 0.1 percent. These numbers, Nomura experts argue, reflect the relatively small amount of direct trade between the UK and the respective countries compared to their share of total exports.

However, experts argue, given that the figures listed below were arrived at using trade linkages, they do not take into consideration factors such as supply of credit, financial conditions, domestic investment and employment decisions. Therefore, they do not reflect the potential for growth contagion from the UK.

The financial services group has yet to update its forecasts on EEMEA, which will take into account future EU and UK forecast changes.

Georgeta Gheorghe

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