85% (!) Increase in current account deficit in 2017: Short-term debt increases, foreign investment stagnates
The current account of the balance of payments recorded a deficit of EUR 6.464 billion last year, 85% higher than in 2016. The minus registered… Mai mult›
Romania recorded a 0.78% price increase in the first month of the year compared to the previous month, which led to an inflation rate of… Mai mult›
Romanian taxpayers waiting for ANAF reform The World Bank found that ANAF’s modernization process stalled immediately after the first stage of the acquisition of the… Mai mult›
Research domain: if private sector does not finance it, state does not stimulate it. A few comparisons with other countries from East being in this suffering
Romania ranked last year second to last among the EU member states in terms of R&D expenditure as a share of GDP. With only 0.48%,… Mai mult›
Romania – highest financing costs among ECE states: prospects of vulnerability increase and accentuation
The financing costs of Romania and Hungary have increased, while costs of other Central European countries have maintained steady in the last week –… Mai mult›
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.
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)
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.
Lăsați un comentariu
The member organizations of the Coalition for Romania's Development (CDR) urge the Government that the reform of ANAF should become one of the "top" priorities… Mai mult›
Government has approved procedure for acquiring four multifunctional corvettes built in Romania and asks US Government to sell long-range ballistic missile to it
Romanian Government approved Thursday two decisions on the national endowment programs - "Multifunctional corvette" program and "Multiple long-range ballistic missile launcher system" - HIMARS. According to… Mai mult›
The operator of the national natural gas pipeline Transgaz (TGN) and Eustream, its Slovak counterpart, signed a memorandum of understanding "to investigate the opportunities to… Mai mult›
AOAR: Solutions to imbalances produced by chaotic tax legislation - business environment reaction to a slander from a minister
The Businessmen's Association of Romania (AOAR) proposes a series of solutions to get out of the "chaos" of the fiscal and revenue legislation adopted last… Mai mult›
The Government approved on Thursday the OUG comprising the measures needed to preserve net wages that professional groups exempted from income tax and part-time employees… Mai mult›
Romania needs to adopt a different economic model if it wants to avoid a crisis caused by the current consumption boom, according to Matteo Patrone,… Mai mult›
According to the perception of managers from the field, the manufacturing industry will register a relative stability of production volume in the following months (conjuncture… Mai mult›
The Romanian Business Leaders (RBL) Macroeconomic Confidence Index, of 52.3 points, shows that the entrepreneurs and executives from the most important businesses in Romania have… Mai mult›
UPDATE: In a statement issued to RFI, OLAF confirmed the investigation at Metrorex, and its topic - the Metro Line 5 (M5) financed by European… Mai mult›
The Ministry of Finance is trying to take advantage of the still favourable conditions for emerging government securities and goes on the Eurobonds market with… Mai mult›
The total volume of loans planned by the Ministry of Finance (MFP) for 2018 amounts to about RON 74 billion. Loans are to be secured… Mai mult›
Pessimistic expectations about the future in latest CFA Romania research - economists anticipate a decrease of personal incomes and continuous depreciation of Romanian leu
In December 2017, the macroeconomic confidence indicator of CFA Romania declined to 41 points, the lowest value since April 2013, by 3.1 points below the… Mai mult›
BNP Paribas, the largest French bank and the second largest in the EU by the size of assets, will launch its retail operations in Romania… Mai mult›
The BNR will impose restrictions on credits to the population, to anticipate potential non-payment risks. This could happen in March if the project is approved… Mai mult›
The European Parliament will run debates on the situation of justice in Romania in the next plenary session, in February, in the Strasbourg plenary. The… Mai mult›