SIMILAR ARTICLES

Brief picture of economy. 2018 GDP growth after first nine months: 4.2%

The economic growth on the first three quarters of 2018 was 4.2%, both in gross series and the seasonally adjusted series, according to data published… Mai mult

Budget revenue, historical minimum – below two-thirds of EU average as a share of GDP. Declining trend and low values ​​across the board

Romania ranked penultimate among EU member states in 2017 in terms of budget revenues share of GDP, according to Eurostat data. With only 25.8%, our… Mai mult

Labour cost, nearly 14% higher than last year. Implications

Hourly labour costs grew by 13.91% in the third quarter of 2018 compared to the same period in 2017 (+1.53% compared to Q2 2018), according… Mai mult

“Man, there is still time”/ We meet 13 out of 14 criteria on European dashboard: but how do we overcome two neuralgic points?

According to Eurostat, Romania observed 13 of the 14 indicators set for the scoreboard of the macroeconomic situation in the EU member states last year.… Mai mult

Romanian research has come below the level registered at the EU accession moment. And it reached one sixth of EU 2020 target

Romania insists on staying on the penultimate position among the European Union member states in terms of R & D expenditure in 2017, according to… Mai mult

Cronicile

How Romania is seen from an EU economic indicators perspective

de Marin Pana , 17.9.2018

Eurostatistics is a synthesis based on a set of standardized and harmonized benchmarks for the comparability between countries at the European level (Principal European Economic Indicators – PEEIs in English).

These indicators are published and reviewed monthly, in order to provide a synthetic picture of a national economy and recent developments.

Here is the way it looks, on the website of the EU statistical body, a selection of the indicators of interest for the way Romania is seen from the outside, from the perspective of the centralized analysis at the level of the EU and the conclusions that can be drawn from recent economic evolutions:

*

  • Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018
  • Labour costs (%, Q/Q4)
  • Turnover in the services field (%, Q/Q4)
  • Employment (Q/Q-1)
  • Job vacancy rate (%)
  • Housing prices (%, Q/Q4)
  • Current account
  • Mar 18             Apr 18             May 18            June 18           July 18            Aug 18
  • Unemployment rate (%)
  • Industrial production (%, M/M-12)
  • Construction (%, M/M-12)
  • Long-term bond yield (%/year)
  • Euro/RON exchange rate

*

Remarks

Firstly, the steady increase in labour cost draws attention, an increase well above the economic advance and constantly speeding up.

What does not appear (because of the dilution in the overall average) in European statistics is even more important, namely the significantly intensified rhythm of increases in the public sector compared to the private sector.

It is noteworthy in this context that since the beginning of 2017 the turnover evolution in the services sector was far from keeping up with the evolution of revenues which rose far beyond the productivity advance and were reflected in the evolution of labour costs. But the service sector is predominant in the GDP structure in any advanced economy.

With the benefit of a slowdown in the inflation index, the extra money went at a significant proportion to the real estate sector. This is where heavy struggles take place to maintain it, at the very least, within the macroeconomic stability benchmark of + 6% displayed on the scoreboard in Q2 2017, then moderated but returned to the trouble area earlier this year.

The employment, set on the downward trend in Q3 2017, returned to better values in the two following quarters, although the job vacancy rate slightly increased back from 1.1% to 1.3%, namely where it was also at the beginning of 2017. The signals are that it is becoming increasingly difficult to find people with certain specializations and skill levels.

The unemployment rate has maintained constant and relatively low compared to the European average, but it would look quite different after adjusting it with those who went to work abroad. Here is the explanation of the relatively low budget revenue collection as a share of GDP (about 70% of the EU average), although the taxation level is not low. But with 70% of the country’s workforce left, we can only have 70% of the revenue collection at a 100% load of those who stayed to support the state budget.

Incidentally, what about the social solidarity between generations in terms of paying the pensions? Those who stayed to work in Romania also support the parents of that 30 % who went to more promising places. Who, from higher wages, also send money home directly to those who are jointly supported by lower wages offered in the country.

For now, the evolution of industrial production, the one that sets the tone for the whole economy, remains robust, but the merits belong exclusively to the private sector, as there is no involvement of the state in terms of significant investments. The latest data on the construction sector also shows a recovery, but the trend remains to be confirmed in the next quarters.

Unfortunately, yields of government long-term bond rose above the 5% level at the beginning of Q3 2018 and will have consequences on interest payments, already up by 20% in the first seven months of the year, despite the decrease in the public debt share in GDP.

In spite of the current account deficit increase and the decrease in economic performance, including an increase in the trade deficit, the euro/RON exchange rate remained relatively stable and even returned to slightly lower levels in the summer months, as the attempt of exceeding the threshold of 4.65 RON/euro has been halted in the middle of the year.

All in all, data show that we should curb the forced march of increasing incomes, be they wages or pensions, to correlate them much more closely with the labour productivity and the results of the real economy. While not yet problematic, the picture of the economic data monitored by Eurostat raises questions about the macroeconomic stability.

Something that is like health, which you do not value enough until you lose it.

Mergeți în homepage ›

Publicat la data de 17.9.2018

Lăsați un comentariu


NEWS

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

New 100% Romanian tractor has been launched. Features, endowments, price

IRUM Reghin launched the first 100% Romanian tractor, announced Digi24, designed and built by the company’s engineers, 15 years after the Romanian tractor manufacturing disappeared.… Mai mult

Romanians from abroad sent as much money to Romania as Government attracted from European funds and subsidies

Romanians working abroad sent EUR 2.695 billion to the country in the first eight months of 2018, equalling the European funds and subsidies received in… Mai mult