SIMILAR ARTICLES

What Romania exported and imported in 2017. Some observations

According to INS data, last year, the automotive industry was the driver of Romanian exports, with about EUR 9.6 billion, of a total of EUR… Mai mult

Real salary goes “down to Earth”. Health and education are still Cinderella

The average gross salary earning announced by the INS for February 2018 was 4,128 lei, 0.4% lower than in the previous month. Paradoxically, the net… Mai mult

EU tax harmonization plan may have negative effects on Romania. Bucharest – totally unprepared

European authorities are taking increasingly decisive steps towards tax harmonization of the 27 systems remained in the EU, but the new measures may have negative… Mai mult

Beware of who bears the burden: Atypical arrangement of wage cost increase in Romania in 2017

Romania ranked first in the EU in 2017 by the labour cost increase, according to data published by Eurostat. With an increase of +15% in… Mai mult

A ruthless table: Number of Romanians who obtain citizenships in other EU countries is growing more than those who run away from dictatorships

The number of Romanians who obtain citizenships in other EU countries keeps growing. Only in 2016, 29,700 people swore to another member state, compared to… Mai mult

Romanians’ actual individual consumption got ahead of GDP/inhabitant – Eurostat sees us at 61% of EU average

de Marin Pana , 27.12.2017

Romania has reached 61% of the average living standard in the EU 28 in 2016, according to the actual individual consumption indicator (AIC), the latest data released by Eurostat shows.

The gap between this indicator and GDP per capita, initially at a minimum level, has been increasing since 2014 and the theoretical minimum standard of living mentioned for the adoption of the euro has already been reached.

In the more familiar method of measuring living standards, which is GDP per capita at the parity of the standard of the purchasing powers, last year we were at 58% of the EU average, with the mention that these figures have been slightly adjusted downwards compared to the initial estimates of the central EU statistics body.

We went ahead Croatians and are getting closer to Hungarians

In terms of the consumption measured by AIC, our country exceeded Croatia and recorded the highest increase in this indicator in the last three years of all EU countries. Contrary to the public perception, which calls for a further substantial increase in revenue, the advance between 2014 and 2016 was no less than five percentage points.

GDP per capita compared to AIC

The actual individual consumption (abbreviated AIC in English) reflects more accurately the well-being of a citizen in a country than Gross Domestic Product per capita. The latter is based on the goods and services purchased and paid by a household.

Instead, AIC is calculated based on the goods and services actually consumed by individuals, without taking into account that they were contracted and paid by households, governments or non-profit organizations. Therefore, it is preferable for international comparisons and better reflects the standard of living.

The differences result from the fact that the share of payments made directly by households for important services, such as health and education, varies considerably from one country to another. Therefore, the apparent ranking of countries by the standard of living, which would result from the comparison of the classic GDP per capita, may undergo important changes.

Evolution of European ranking between 2014 and 2016

Here’s how the values from 2014 to 2016 are presented, to see the developments in the past three years analysed by Eurostat and the significant changes occurred in the positions of different states. Romania sets itself clearly apart due to the spectacular evolution of the level of income measured by the actual individual consumption.

*

  • Evolution of AIC/capita and GDP/capita in EU countries (between 2013-2016)
  • Country           AIC/capita       GDP/capita
  • Source: Eurostat
  • *following mainly the changes in the registered offices of some big companies from the UK to Ireland

*

The biggest differences between the AIC and GDP per capita at the EU level (beware, all negative) are noticed in the Netherlands, Denmark and Sweden. Ireland is in the special situation of some circumstantial statistical reporting due to the relocation of some large companies, and Luxembourg is a special case due to the influx of workers from neighbouring countries.

Italy, Romania’s second largest trade partner, is the country closest to the EU average in both indicators of living standards. Given also the similar cultural component, it represents the most accurate reference for our process of real convergence.

In the ranking by AIC in 2016, the podium is occupied by German-speaking countries, with Luxembourg far ahead at 132% but in a loss of speed (138% of the EU average three years ago) and Germany and Austria at a level roughly double our level. A compact block of seven states follows with values between 110% and 116% relative to the European average.

Some interesting situations for EU member states

Interestingly, of the former components of the eastern bloc, Lithuania has become the most advanced in terms of AIC. Somewhat discreetly, it has reached 85% and positioned between Spain and Portugal, although in terms of GDP/inhabitant it is below the Czech Republic, Slovenia and Slovakia, with an identical value to Estonia (75%).

After they intersected, as coming from opposite directions (something also for us to be aware of, as we have a controlled floating exchange regime and could have been considered successful following a possible Eurozone accession), the Czech Republic has overtaken Greece in terms of actual consumption, and the increasing difference in GDP per capita eventually had its say.

Slovenia, Slovakia and Poland are preparing to do the same and mark the difference in approaching the economic policy between Central European and Balkan countries. In the same register, it is worth mentioning that Poland and Hungary are positioned in Eurostat with almost the same level of GDP per capita (68% and 67%). Nevertheless, in terms of actual living standards, Poles appear far above Hungarians, with the score of 74% to 63%.

The difference between Romania and Bulgaria has increased over the last three years from five percentage points to eight percentage points in terms of AIC, although the change in the GDP per capita gap in the purchasing power parities has seen a minimum adjustment of only one percentage point.

The benefits granted in 2015 and 2016, more or less questionable in relation to the possibilities resulting solely from the robust economic growth, brought us above the threshold of 60% of the EU average in terms of AIC, even before the GDP per capita reached this share. The question remains whether this ratio, between the living standards level measured by the actual consumption and the one resulting from the GDP/inhabitant, can be sustained.

Mergeți în homepage ›

Publicat la data de 27.12.2017

Lăsați un comentariu


NEWS

Industrial production, up 7% in first two months of 2018, compared to the same period of last year

Industrial production (gross series) was up 7% in the first two months of 2018 compared to the same period in 2017, following the growth in… Mai mult

Deloitte study: Romania vs. EU - Tax rules applied to losses from selling bad loans

Deloitte Romania, at the request of the Romanian Banking Association, conducted a study for analysing the tax treatment of the sale of receivables and the… Mai mult

Transgaz, favourite to take over Greek natural gas transport operator

The US and the EU support Transgaz-Reganosa (Spain) offer to take over the Greek natural gas transport operator DESFA, for geopolitical reasons, the Greek media… Mai mult

Workforce (i)mobility: Unemployed young Romanians are not willing to move to another locality for a job

Romania has one of the highest percentages of young unemployed people who would not leave their hometown to find a job (either in the country… Mai mult

Unions: State will pay detainees between EUR 370 -550 million

Total compensation that the state will pay to detainees who have been imprisoned in improper conditions will be between EUR 370 million (in the case… Mai mult

Schweighofer sells forest domains owned in Romania and only keeps processing activities

Schweighofer Group, one of the European leaders in wood processing, announced on Monday "a strategy change": it sells its subsidiary Cascade Empire S.R.L. (Cascade Empire)… Mai mult

Dancila government has established "Commission for Preparing Changeover to Euro". Another committee has been already doing the same thing for a year and a half

On Wednesday, the Government adopted an Ordinance aimed at establishing a commission for preparing the timetable for Romania's accession to the single European currency. Prime… Mai mult

Mangalia Shipyard: Agreement between Ministry of Economy and Damen. Dutch buy Daewoo shares, give state 2%

The state has reached an agreement with Damen Shipyards Group after blocking for several months the takeover by Dutch company of Daewoo's shares at Mangalia… Mai mult

CCR judges are no longer willing to participate in MCV assessments

The President of the Constitutional Court (CCR) has communicated to the European Commission (EC) delegation the fact that "the Court plenary expressed its wish not… Mai mult

Five priorities of the Coalition for the Development of Romania presented to Dancila government

Representatives of the Coalition for the Development of Romania (CDR), an initiative of the Romanian business community coordinated since the beginning of this year by… Mai mult

Romania to host regional centre for endowment of Black Hawk helicopters for Central Europe

Romaero and American company Sikorsky, part of the Lockheed Martin group, have signed an industrial partnership agreement that will lead to the establishment of a… Mai mult

State-owned companies forced to participate in public tenders

The Government approved on Thursday a memorandum that includes a series of measures targeting publicly owned or controlled companies. Basically, the document forces the state-owned… Mai mult

Country Report - European Semester: Romania risks a tough economy landing at change of cycle, because of growth model

"In the absence of structural reforms and fiscal consolidation, Romania's strong economic growth risks creating the conditions of a tough landing," in case of a… Mai mult

Governance and Congress: Prime Minister Dancila appointed PSD Vaslui and Neamt leaders’ sons as state secretaries

Prime Minister Viorica Dancila, who is aspiring to the position of PSD executive president, promoted the sons of PSD Vaslui and Neamt presidents to government… Mai mult

Monopoly on natural gas market in Romania: Interests supported by deputy Iulian Iancu push Romania to an open conflict with European Commission

The European Commission will sue Romania at the European Court of Justice if the Parliament in Bucharest adopts the amendments to the Emergency Ordinance 64/2016… Mai mult