Romania: Ruling party setbacks may be positive for investors
The ruling party, the Social Democrat party (PSD), has suffered three material political blows in recent days: (1) poor performance in the EU elections, (2) the passage of the referendum which better safeguards anti-corruption, and (3) a legal verdict upholding a jail sentence against PSD leader Liviu Dragnea in a long-running corruption case.
Investors should react positively to this, given the PSD's recent poor track record on macroeconomic policy. Although there is no immediate threat to the PSD legislative majority and its government, its re-election is in peril. The next presidential election is due in November 2019, while the domestic legislative elections (which are much more important in terms of forming the government) are due in December 2020.
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