SIMILAR ARTICLES

70% of economic growth in first three quarters of 2018, obtained by stocks increase. Foreign exchanges pulled down GDP by 1.6 percentage points

INS recalculated GDP in the third quarter and the first three quarters of the year. Here are the growth data for the Romanian economy, updated… Mai mult

Romanian Leu of 2019: Depreciation rate depends on budget credibility and seriousness

The estimates by economists of most important banks in Romania on the depreciation of the local currency for this year range between 4.73 and 4.77… Mai mult

Romania and energy: Position in European context

Final energy consumption of Romanian industry declined by about 75% between 1990 and 2016, compared to only 25% at the EU level, according to data… Mai mult

Crash signal in foreign trade – export coverage ratio has fallen to 2011 level. And we do not import robots

The trade deficit on November 2018 was EUR 1.567 billion, the second worst monthly performance registered last year. Worryingly, the growth rate of exports compared… Mai mult

Intense M&A activity in 2018 in Romania – Deloitte analysis

The Romanian mergers and acquisitions market reached nearly EUR 2 billion in 2018, according to a Deloitte Romania analysis based on public sources and transactions… Mai mult

Cronicile

Romania has exceeded 60% threshold of GDP/capita related to EU average: Severe abnormalities in domestic distribution

de Marin Pana , 5.2.2018

Romania has exceeded the 60% GDP per capita related to the EU average, according to data available after Eurostat released the preliminary estimate of the economic growth recorded at the EU and Eurozone level in 2017. The estimate was based on the values communicated by 17 member states that cover 90% of the EU GDP.

Thus, the EU 28 ended last year with an advance of 2.5% (the same for the Eurozone), while Romania will have an increase of more than six percent. The National Prognosis Commission announced 6.1%, equivalent to only 4% growth in the last quarter, after the level of 7% already confirmed for the first three quarters and 8.8% in the third quarter.

Most likely, Romania will reach close to 6.5%, which represents an increase of four percent compared to the EU average. Which, correlated with the starting point of 58.2% in 2016, added in 2017 another two and a half percent to the country’s result, with a solid safety margin for exceeding the GDP per capita benchmark of 60% of the EU average.

Methodological explanations

Data provided by Eurostat have been processed in line with the European System of Accounts ESA 2010 and the signal preliminary results for the fourth quarter of 2017 are based on the values already communicated by 17 member states that cover 94% of the Eurozone Gross Domestic Product and 90% of the EU28 GDP.

The first estimate of the economic growth for the whole of 2017 was obtained by dividing the sum of the quarterly increases in 2017 by the sum of the quarterly increases in 2016, where the values in euro were corrected for seasonality. The National Institute of Statistics would provide the public with the signal estimate for 2017 on February 14, 2017.

It is noteworthy that the calculation of GDP per capita related to the EU average is not made directly in euros but there is a prior adjustment by the price level in that country relative to the EU average price level so that purchasing powers derived from the incomes can be properly compared to each other.

Issue: External gap has narrowed, internal ones have extended

Against this background, the 11 years of the EU membership have led to an increase in the relative living standard, measured by GDP per capita, of nearly 55% (see table). For an average inflow of European fund of 2.8% per year and payments to the common budget of 1%, there is a net benefit of 1.8% of GDP which brought an annual growth rate between 1.2% and 1.6% (interesting “conversion factor”).

*

  • Evolution of GDP/capita in Romania compared to the EU average (% at the parity of standard purchasing powers)
  • Year
  • GDP

*

As we can see (very surprisingly) from the Eurostat data, the gap with the West has diminished even during the economic crisis, and our advance to the 60% phase target, although slowed down after the initial moment, has maintained. We remind that this benchmark has been invoked as a starting point for launching the procedures for euro adoption, but things have become complicated in the meantime.

By placing the 21 percent recovered in relation to an average, let’s say 1.4% per year as additional economic growth (1.2% -1.6% were the values indicated until 2016), it means that roughly two thirds of the gap decrease represent the result of what we did, but one third was due to the influences that came along with the European accession.

Simply put, the EU membership and the access to the single market have boosted by 50% our effort for progress. Which, at a first glance, is a notable success of the strategic vision that brought us (fortunately) to the EU in 2007.

In a closer observation, though, two types of problems can be identified that have affected this idyllic picture.

First, the development did not take place evenly, and inequalities since the start on the road of the prosperity induced by the “consumer society” have widened between the country regions and within, between neighbouring counties.

Secondly, the material part of the capacity to purchase goods and services at an individual level went far beyond the state’s capacity to provide quality social services (healthcare, education, etc.) and a Western-level communications infrastructure. From this point of view, we are far from the 60% level that will be displayed as a benchmark.

Noteworthy, while the deepening of inequalities has brought, for example, Bucharest to a GDP per capita (by the purchasing power parity) above Berlin or Lisbon, the increase in inequalities between the richest 20% of Romanians and the poor fifth of the population up to a ratio of over 8 to 1 resulted in the economic success being felt as total by some and almost close to zero by others.

The mid-term BNR estimate for the interval until 2022 shows that we need a 95% rate in the absorption of the European funds to obtain an additional 1.7 percentage point in the economic growth, to reach a potential GDP of 5% (reference value for Romania for a growth in a context of stability).

So, the 50% increase in our efforts based on the European money will be maintained if we have the intelligence and the strength of mind needed to access them correctly. We could also make the moral effort to redistribute in a somehow more equitable manner the benefits obtained at the regional and personal level.

Mergeți în homepage ›

Publicat la data de 5.2.2018

Lăsați un comentariu


NEWS

Mugur Isarescu: "Ordinance weird thing" reduces monetary policy efficiency, which will not help Government

The National Bank of Romania (BNR) will convoke the National Committee for Macro-prudential Supervision, where the Ministry of Finance will be required to clarify the… Mai mult

World Bank lowered prospects on Romania's economic growth for 2019 and 2020

  Romania's economy will record an advance of 3.5% in 2019 and 3.1% in 2020, down one percentage point from June 2018 forecast, according to… Mai mult

State is borrowing at increasingly higher costs - government bond yield reached 5.33% per year

The benchmark government bond yield jumped above the 5% threshold on Thursday. The Ministry of Public Finance (MFP) attracted RON 300 million from banks on… Mai mult

Iasi - Tg.Mures highway disappeared from Large Infrastructure Operational Programme 2021-2027

The Ministry of European Funds has taken out Iasi-Tg. Mures highway project from the Large Infrastructure Operational Programme 2021-2027 and the Ministry of Transport already… Mai mult

Senate postpones discussions on DNA’s request on waiving immunity of Calin Popescu Tariceanu until February 2019

The Senate has decided that it will put to the vote the decision to waive Calin Popescu Tariceanu's immunity only in the spring session, that… Mai mult

Implementation of 5G technology, a multiplication effect in economy of EUR 4.7 billion - announces Sorin Grindeanu (ANCOM)

The National Authority for Management and Regulation in Communications (ANCOM) launched on Wednesday the National Strategy for the Implementation of 5G Technologies in Romania for… Mai mult

FIC: Amendments on Criminal Codes expose business environment to abuses from civil servants

Some of the amendments to the criminal codes will generate mistrust regarding Romanian state's ability to ensure the legality, stability and predictability of business relationships… Mai mult

European Semester / European Commission asks Romania to correct its medium-term structural deficit by 1% of GDP

Minister Eugen Teodorovici is pressured by the EU to reduce the budget deficit After finding that the Government has done nothing to adjust the deviation… Mai mult

Sovereign Fund gets legal base. Details announced by Minister Teodorovici

The Government adopted on Thursday the ordinance that provides for the general framework for the establishment of a Sovereign Fund. Later, after new talks with… Mai mult

Ford is looking for 1,700 employees to produce EcoSport SUV model

The representatives of Ford Craiova met on Wednesday with mayors of 30 localities from Dolj county in order to stimulate the attraction of 1,700 new… Mai mult

Development strategy / Government squeezes even investment money from its own companies: EUR 120 million from only two entities in energy field

Nuclearelectrica (SNN) and Romgaz (SNG) have calculated the additional dividends to be paid to the state after the Ministry of Finance (MFP) sent to the… Mai mult

DNA, officially: Senate President is suspected of having received a USD 800,000 bribe. Case file opened at a request from Austrian judicial authorities

The case file in which the DNA requested the waiving of the Senate President’s immunity was opened at the request of Austrian judicial authorities and… Mai mult

Illegal state aid / European Commission demands Romania to recover EUR 60 million from CE Hunedoara

Romania has to recover illegal state aid worth EUR 60 million granted to Compexul Energetic Hunedoara, announced the European Commission with a statement released on… Mai mult

Ministry of Finance planned loans of RON 4.74 billion in November. Costs are increasing

The Ministry of Public Finance (MFP) intends to borrow in November RON 4.74 billion, 1.4% more than in the previous month, according to the Ministry.… Mai mult