Romanian retail investors are increasingly losing their confidence in the Romanian economy, with 70% of them now saying they are not confident about its prospects, up from 61% in Q2, according to the latest quarterly eToro Retail Investor Beat survey.
In a country that continues to struggle with slow growth, high budget deficits, and high inflation, the uncertainty brought by the recent deficit-cutting reforms and increase in taxes, may explain the higher level of distrust in the evolution of the economy, writes eToro analyst for Romania, Bogdan Maioreanu.
Romania has the highest inflation in the EU, and the country only narrowly avoided a junk rating from S&P in July. If we compare this quarter’s survey results with the previous one, we can see an increase in the number of investors who are not at all confident in the local economy, to 27% from 18% before, while the ones who said that are not particularly confident remained the same (43%).
The latest poll, which covers the third quarter, also shows a significant decrease in the level of confidence about job security, which dropped to 69% of respondents from 77% a quarter ago. Gen Z (18-27 years old) are the most confident (79%) followed by Millennials (28-43) and Boomers (60-78) (both 68%), while Gen X (44-59) show the lowest confidence in their job security (62%).
At the same time, we have seen a loss of confidence in the income and the cost of living. Only 63% of Romanian retail investors are confident about their living standards this quarter compared with 73% a quarter ago. Among the age groups, the most confidence is again in the youngest generation, Gen Z, with 78%, followed by Millennials (60%) and Gen X and Boomers with 58%.
The global uncertainty, combined with the Romanian economy’s situation, unclear governmental and budgetary reforms, also resulted in the lowest degree of confidence in their own investment portfolios (75%) since the beginning of 2023. Almost half (49%) of Romanian retail investors have local stocks in their portfolios, 40% have foreign equities, 50% have a form of crypto assets, while two-thirds have cash, including savings accounts.
This distrust in local economies is present at global level too, although it is more pronounced in Romania. When asked, 52% of retail investors said they do not trust their country’s economy. If we look at specific countries, 73% of the French, 70% of the Romanian, 62% of the Czech, 60% of the British, 59% of the Italians and the Spanish, and 58% of German retail investors expressed their distrust in their local economies. Singaporeans (77%), Danish (72%), Dutch (68%), Americans (57%), Poles (53%), and 50% of Australian investors have shown the highest confidence levels in the prospects of their economies.
With plenty of uncertainty ahead, persisting high inflation and a very unclear picture of the Bolojan government reforms, the Romanian retail investors, in their majority, are worried about the prospects of the local economy. We have also seen a sharp decrease in confidence in income, cost of living and job security. This should give politicians across the whole political board a lot to think about and the urgency to find the right measures for the budgetary deficit and for the Romanian economy.
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