change of leadership, but no change in vision

Prime Minister Sorin Grindeanu is in the process of stepping down from the leadership of the government following the escalation of tension within the ruling party, PSD, as party leader Liviu Dragnea is keen to oust the Prime Minister on the basis that the government has failed to deliver on the agreed policy programme. In our view, the current crisis is likely to result in a change of Prime Minister, but not a genuine change in policy priorities. Local opinion polls are infrequent, but a recent poll shows that there is still a high approval rating for PSD. However, our on-the-ground research shows otherwise. The electorate is demanding greater focus on growth measures, not shortcuts, and a strong reduction in corruption. PSD is not perceived to be the party capable of doing this. We reiterate that the widening of the current account suggests mild depreciation pressure continuing ahead, but not a major currency devaluation, which we also expect to be strongly resisted by the central bank.