Page 8 - Economic Outlook Romania 2019

External backdrop – summing up

USA

• Late cycle, fiscal stimulus fading

• Still low but increasing recession probability

• One more Fed hike this year

Eurozone

• At best, lower cruising speed lies ahead

• Structural reforms (labour market) and fiscal stimulus needed to boost growth

• ECB to move ahead with tightening in late 2019

EUR/USD: 1.20 in 12 months from now

• We view the dollar bubble having been inflated in 2018

• The key question being when does this deflate/burst?

• Twin deficits should be bearish for the dollar at some stage

• Late 2019/early 2020 the market to start pricing of Fed easing cycle

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