Q2 / Average monthly income per capita in Romania has risen to nearly RON 1,600: Changes in redistribution of family budget
Data published by INS for the second quarter of 2018 show that Romanians’ monthly incomes have reached nearly RON 1,600 per person. They were RON… Mai mult›
According to the data released by Eurostat, Romania’s current account deficit exceeded, in the second quarter of the year, the threshold of five percentage points… Mai mult›
Strategic chemical industry: Romania, on top in import increase and ranking last in EU in terms of increase in exports outside single market
Data published by Eurostat show that Romania recorded the second highest annual growth rate in imports of non-EU chemicals from 2007 to 2017 (13.1% per… Mai mult›
Rising incomes have fuelled consumption and, implicitly, the economic growth in recent years, but not the savings. Although a large proportion of the population… Mai mult›
Total turnover in the IT sector increased by 11 percentage points in 2017 compared to 2016 and exceeded the four billion euro threshold forecasted, according… Mai mult›
de Adrian N Ionescu , 1.10.2018
But it has a big congenital problem: over the last 10 years, Romania has gained less than Poland did from lower but much more stable growth rates.
The average annual growth rate in the last 10 years was 2.5% in Romania and 3.3% in Poland, according to Eurostat data, in current prices and national currencies.
The economic growth evolution illustrates the wide range of variations in Romania’s case, with distant extremes, while Polish increases had lower extremes but only positive values.
- Evolution of economic growth in Romania and Poland
Increase “from wages” versus sustainable growth
Romania’s GDP grew by 8.3% in 2008 based on the unsustainable consumption growth resulted from wage increases.
The result was that, while Romania had afterward two years of recession, deep in 2009 (-5.9%) and severe in 2010 (-2.8%), Poland only altered its growth rate in 2009 (to 2.8%, from 4.2% in 2008).
Also in 2017, the 6.9% increase was almost exclusively the result of earlier wage increases, as well as a fiscal loosening that encouraged consumption.
The negative correction of the rhythm in 2018 will again be deep in Romania (down to almost half compared to 2017 – analysts say).
- Erste Group Research macroeconomic estimations
At the same time, Poland will increase its growth rate (from 4.6% to 4.9, according to Erste Group Research).
Quality of growth
Differences in the quality of growth are added to statistical differences and Romania’s growth seriously affect the chances of progress in the future.
In 2009, Poland’s strengths were the stable and developed domestic market and the ability of decision-makers to control imbalances, according to the IMF.
Instead, Romania’s economy collapsed, unbalanced by the effects of massive imports that fuelled consumption.
Then Romania had to cut wages and increase VAT, while Poland knew how to use European funds to maintain growth during the crisis within the positive range and could cut income tax and stimulate consumption at the right time.
In 2017 the two economies were stimulated by consumption, but again with proportions that have damaged the balances in Romania, respectively preserved balances in Poland.
The budget deficit was 1.7% of GDP in Poland last year, while the Romanian Government barely managed to maintain it at 2.9% (one step below the EU’s maximum accepted level).
Last year Poland recorded a surplus in the current account (even though of only 0.2%), while the Romanian current account deficit was 3.3% of GDP.
Signs of current dangers
The indicators of Polish and Romanian economies differ now as dangerously as before for the Romanian economy, (within the statistical proportions).
The evolution of the construction sector is negative in Romania and positive in Poland.
The Polish economy confirmed its growth rate in Q2 of 2018 (5.2% y-o-y after 5.1% in Q1).
In Poland, “the sharp decline in investment was almost entirely offset by the acceleration of exports,” says a Capital Economics report issued on Tuesday.
Instead, the Romanian economy continued to slow down its growth rate (4.2%) after a previous rhythm collapse.
In Romania, not only are investments decreasing, but net exports are negative.In Poland, wage increase will also trigger the increase in inflation, but it tends towards capping (2.0% in August, after 1.9% in July).
In Romania, salary increases of 14.4% (y-o-y in May) led to a significant increase in inflation to 5.1% in August, compared to 4.6% in July.
Lăsați un comentariu
Only Cluj-Napoca is among the 22 European cities that will receive financing from the European Regional Development Fund (FEDR) for innovative solutions in addressing urban… Mai mult›
Prime Minister Dancila dismissed 13 of 15 civil society representatives from Economic and Social Council. They were blocking legislation that did not gathered all opinions
Prime Minister Viorica Dancila has replaced 13 of the 15 civil society representatives in the Economic and Social Council (CES). Following a decision published on… Mai mult›
West Quadrilateral / Four counties joined to directly access European money for major infrastructure projects
From right to left: Gheorghe Falca, Nicolae Robu, Ilie Bolojan. Emil Boc, Mayor of Cluj Napoca, misses Four mayors from the West of the country… Mai mult›
Chamber of Deputies / PSD loses UDMR’s support for amending Offshore Law, draft returns to committees for a week
The plenum of the Chamber of Deputies decided on Wednesday to resend the Offshore Law to committees after a seemingly surprising request of UDMR leader… Mai mult›
The Government adopted on Thursday the draft Emergency Ordinance for amending and supplementing legislation in the field of insolvency, which provides among other things for… Mai mult›
Unlike the vast majority of the economic areas, in which we are at the bottom of the European ranking, Romania succeeded to rank 7th by… Mai mult›
There are clear signs that the lobbying action launched by the ruling coalition in Brussels in favour of the government in Bucharest will end with… Mai mult›
MFP: Romania does not endorse a separate budget for Eurozone and rejects the idea of taxing financial transactions
Romania does not endorse a separate budget for Eurozone and rejects the idea of taxing financial transactions, Minister of Public Finance Eugen Teodorovici said after… Mai mult›
Finance Ministry wants to change rules for insolvency: state could also register claims after procedure is launched
Companies’ possibility to avoid paying creditors (and in particular the payment of tax receivables) simply by declaring their insolvency would be drastically limited, according to… Mai mult›
Prime Minister Viorica Dancila, European Commissioner Phil Hogan and Agriculture Minister Petre Daea The swine fever epidemics in Romania has an impact on neighbouring countries,… Mai mult›
Infrastructure projects lost EUR 41.5 million following budget amendment. In what projects cuts have been made
Despite the assurances that Dancila government is concerned and intensely working on the road infrastructure projects, at the budget amendment the Transport Ministry has cut… Mai mult›
Leaders of the political groups in the European Parliament have decided to adopt in October a resolution on the rule of law in Romania. The… Mai mult›
"Romania's buffers have deteriorated, the country is less prepared for a negative shock" - IMF will reduce economic growth estimate
Romania will be less prepared if the economy is hit by a negative shock, as the structural deficit has been deteriorated - IMF representative for… Mai mult›
Premiere: CSAT asks Finance Ministry to amend amendment - session suspended until Government comes with a draft that does not affect budgets of secret services
President Klaus Iohannis suspended on Tuesday the CSAT meeting for discussing the budget amendment, as there was no consensus on the budgets of institutions from… Mai mult›