Valentin Lazea: Absorption of EU funds could lead to a 4.5% increase of potential GDP

de Victor Bratu | 19.3.2017 .

The International Monetary Fund (IMF) told the officials of the National Bank of Romania (BNR) that a 95% absorption of the European funds would lead to increasing the potential GDP to 4.5%, said Wednesday Valentin Lazea, Chief economist of the National Bank of Romania, at the launch of the “2017 Economic Report for Romania”.

The IMF, which is now in Romania, made a presentation at the National Bank and said that if the European funds could be attracted much better than now and reach 95%, which is a dream, and if this absorption rate would translate into investments where needed, potential GDP, based only on these two elements could be 4.5%. So, potential growth by attracting financing and investments, aside from all other things, demography, health, could be 4.5%. That is not a story I invented,” said Valentin Lazea, according to Agerpres.

He also mentioned Wednesday that Romania reached an excess of demand in the first quarter of 2016.

Between 2010 – 2015, there was a deficit of demand in Romania, which means that expansionary monetary or tax policies would have been justified during that period. When you have a shortage of demand you can afford a tax and/or money relief. Starting with the first quarter of last year, we have a surplus of demand, meaning a positive output and throwing coals on fire now is no longer appropriate. The expansionary tax policy during the excess demand only serves to worsen the blaze right when it should not,” said the BNR official.

According to him, policies should be counter-cyclical.

How we reached from the demand deficit to a surplus? Because the GDP increased year after year faster than the potential GDP. A normal increase that does not have a negative impact is around 3% per year. This is the potential of the current given factors. This potential GDP can be increased by measures of structural reform. The fact that we grew above the potential GDP was OK when we had a demand deficit, but now, the fact that we grow above the potential when we already have an excess of demand becomes a problem because sooner or later that will lead to inflationary pressures and other types of pressures on the public debt and its financing“, added the Chief economist of BNR.

Publicat la data de 19.3.2017 .

Lasa un comentariu


SIMILAR ARTICLES

Victor Bratu

IMF mission concluded consultations in Bucharest – Government’s options

The IMF mission concluded Thursday a 7-day visit in Romania in the annual process of consultation under Article 4, after a small delegation came to Bucharest in January 2017 for a first contact with the new government team The conclusions of this visit, communicated to the Government and the Presidency, are unequivocal: Romania should change the trend of the economic policies from the recent ...
Read more »

Mariana Bechir

Romanian leu depreciated to reach 4.5654 lei/euro, record level of last four and a half years

The reference exchange rate announced Friday by BNR was 45654 lei/euro, 03% more than the level reached in the previous session and a maximum level for the last four and a half years Economists believe that the Romanian economy and the international context would not justify a significant depreciation of the local currency, writes Digi24, adding: However, analysts do not rule out the prospect ...
Read more »

Vladimir Ionescu

Liviu Voinea (BNR): 7,000 notifications on debt to equity swap, by February; loans amounting to 2 billion lei

The number of notifications registered under the Law on debt to equity swap reached to 7,000 at the end of February, representing total loans amounting to 2 billion lei, stated Wednesday Liviu Voinea, Deputy Governor of the National Bank of Romania (BNR), quoted by Agerpres "Updated statistics on the number of notifications on the debt to equity swap show that there are 7,000 notifications at ...
Read more »

Vladimir Ionescu

Siegfried Muresan: Romania should make joining Schengen a condition to accept two-speed Europe

Member of the European Parliament Siegfried Muresan (photo) said in Strasbourg that the idea of a multispeed Europe is not wrong altogether, and Romania should negotiate on the proposals of the EC president, Jean-Claude Juncker, suggesting for our country to ask for the acceptance to join the Schengen area as a condition to accept this scenario for the future of the EU "We are at the beginning ...
Read more »

Mariana Bechir

Investigation on record high prices on energy market: 440 million lei in losses generated by seven to eight traders. Guilty ones lose their licenses

Seven or eight energy traders generated total losses of 440 million lei to the suppliers of last resort and the network operators, losses that will be recovered in court, stated Niculae Havrilet, President of the Romanian Energy Regulatory Authority (ANRE), according to Agerpres All these suppliers will pay "cutting" fines and three or four of them will lose the license, also said ...
Read more »

MAINS

Prime Minister Grindeanu about 2017 budget: 5.2% economic growth, 815 billion lei GDP, 253 billion revenues

Prime Minister Sorin Grindeanu said on Sunday evening on Romania TV that the budget deficit in 2017 will fall within the set target of 3%, ... Read more

Back to the lesson of 2008-2014! Essential viewpoints about the type of growth we choose

The National Institute of Statistics announced the final value of GDP for 2014 at 668,143.6 million lei, in current prices, representing a growth rate of ... Read more

Trade deficit in 2016 is close to 10 billion euros, driven by imports of chemicals, fuel and food

The trade deficit in the first eight months of this year was EUR 6,133.8 million, about 28% higher than the same period of the last ... Read more

”Digital-Schweitzer” Romania: IT specialists explain why citizen is stuck between super computerized institutions

Ciolos government promised a revolution in reducing state bureaucracy, official emphasis being put on digitization and electronic communication, institutions being required to be transparent. This ... Read more