18 Mai 2010
XTB: Instability, the No. 1 threat to investments
X-Trade Brokers Romania said the public sector wage cuts and retirement benefits cut would lower consumption by more than expected, on induced psychological effects.
“It is a far-fetched assumption to think that the government’s austerity measures to narrow budget gap would feed into the state budget the expected amounts, as it could spill over the already rock-bottom consumption. And this would result in an increase in bankruptcies, and jobless claims in the private sector, as well as in a drop in collected VAT”, said Victor Safta (photo), chief executive of X-Trade Brokers Romania.
He added that investment will be discouraged, both due to the aforementioned reasons and as it forces companies to take a wait-and-see approach on lack of visibility in terms of legislation and tax regime.
“Furthermore, any kind of instability – political, social or regulatory – is the no. 1 threat at this point, and throws the country back to years-ago levels”, said Safta.
X-Trade Brokers Romania forecasts a high volatility on all markets, including the national currency.
“The leu has already reacted to the recently announced measures, and to their ‘echoes’ accordingly: last week, on X-Trade Brokers platform, the national currency recorded a variation of 2.34% between the highs and troughs of the period. By contrast, in the first four months last year, the leu had a maximum variation of 4.89%. We expect the leu to remain highly volatile in the coming period”, said the head of XTB Romania.
He added that investment will be discouraged, both due to the aforementioned reasons and as it forces companies to take a wait-and-see approach on lack of visibility in terms of legislation and tax regime.
“Furthermore, any kind of instability – political, social or regulatory – is the no. 1 threat at this point, and throws the country back to years-ago levels”, said Safta.
X-Trade Brokers Romania forecasts a high volatility on all markets, including the national currency.
“The leu has already reacted to the recently announced measures, and to their ‘echoes’ accordingly: last week, on X-Trade Brokers platform, the national currency recorded a variation of 2.34% between the highs and troughs of the period. By contrast, in the first four months last year, the leu had a maximum variation of 4.89%. We expect the leu to remain highly volatile in the coming period”, said the head of XTB Romania.