Economic Developments in Romania

After close to 4 years, the Romanian economy, which had struggled with the economic crisis just like most of the EU countries, appears to have found a way out.

The 3.5% economic growth rate of last year, confirmed by both the National Statistics Institute and the European Commission, has exceeded all forecasts made by experts or international financial institutions, such as the IMF or the World Bank, which were around 2.5%.

This growth rate, the largest in the EU, has simple explanations: the unexpected performances in agriculture, industry and exports.

For the Romanian government, this positive development, accompanied by a sizeable drop in inflation and an improvement of the EU fund absorption, is a reason to be optimistic as regards the economic, social and fiscal targets set for the next two years. Here is PM Victor Ponta:

“The average national salary will go up by at least 5%, the 3.75% pension adjustment has already been operated, and for next year we can safely target a further 4.5% increase.

We will then increase the minimum wages and the minimum guaranteed income, perhaps over the 200-euro level. Other targets are an inflation rate of 2.5% for 1014 and 2015, a reduction of unemployment levels below 7% and the creation of 100 thousand new jobs.”

Moreover, the PM says, thanks to the economic growth, Romania will have access to cheaper loans in the international market, which is highly sensitive to such signals.

However, the IMF tries to tone down the optimism of the Romanian government, and warns that the spectacular economic recovery seen by the Central and South-East European countries last year is fragile, in that it relies mostly on exports.

The IMF also believes that investments in the Romanian economy might decrease slightly this year, as parent-banks from abroad have reduced the funding for their Romanian subsidiaries. For 2014, the IMF expects Romania’s GDP to increase by 2.2%, an estimate shared by the Romanian authorities.

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