The first time it happens, the second time it can be a coincidence but for the third time it is already confirmed the establishment of… Mai mult›
Draft / Employers who do not pay employees’ contributions to state budget are at risk of up to 6 years of imprisonment
The intentional non-payment of taxes and contributions due to the budget, subject to the withholding regime, will be considered a tax evasion, according to a… Mai mult›
Fiscal Council, on 2018 draft budget: Deficit target depends on exceptional revenues. Overvalued revenues, undervalued expenses
The Fiscal Council published a preliminary opinion on the 2018 draft state budget on Wednesday, stating that this draft remains within the already traditional pro-cyclical… Mai mult›
BNR made a thorough analysis of Romania’s status in terms of real convergence with Western economies. A precondition for adopting the euro, in line with… Mai mult›
Keeping the national currency under a controlled float exchange is a way to optimize the sustainable economic growth towards getting closer to the West but… Mai mult›
Warm prognosis: Economic growth of at least 5% by 2021, when average salary would be 700 euros. Difficulties: euro exchange rate and inflation
de Marin Pana 25.9.2017
Romania’s economic growth is expected to remain well above the 5% threshold by 2020, and GDP growth in euro will be at least 8% between 2017 and 2020, according to the preliminary autumn forecast released by the National Prognosis Commission (CNP).
The explanation for this significant difference stays in estimating a decline in the evolution of the euro/leu exchange rate for the next four years, as we can see in the table below:
- GDP forecast until 2021
- GDP (billion lei)
- (billion euro)
- Real growth
- – in euro
Basically, all this projection essentially depends on the ratio between leu and the single European currency, which will have to be considered in a context where we already are by the threshold of 4.60 lei/euro and the negative balance of the current account will increase, according to the same CNP forecast, from about EUR4 billion in 2016 to nearly EUR5 billion in 2017 and even above this level in 2018.
Without going into more complicated technical details, it should be noted, in context, that the current year’s deflator which adjusts the GDP result in current prices, recently increased by RON22 billion (from RON815 billion to RON837 billion), has a position totally outside the values registered in the 2015-2021 period. Especially that it has been revalued from 2.0 in the spring forecast to 4.1 in the current, autumn forecast.
- GDP deflator
Average national monthly net wage is to exceed the threshold of 3,000 lei by 2021, the 500 euro/month level being already checked this year, the 600 euro/month level in 2019 and the 700 euro/month level in 2021.
- Forecast of wage evolution until 2021
- Real growth
Obviously, these increases also depend on the decline of the euro/leu exchange rate but also on maintaining inflation around the optimal level, theoretically speaking, (2%) and even below the mid-rate of the BNR target range, respectively 2.5 percentage points +/- 1%.
However, it could be noted the decline by about half and below of the wage growth rhythm, which will be much closer to the GDP growth and the real possibilities of the economy in the coming years.
- Forecast of price evolution for population until 2021
- CPI (Dec)
- Annual average
Unfortunately, the projection of the annual inflation made by central bank’s specialists until the second quarter of 2019 does not look very much like the data provided by the CNP. The middle value of the uncertainty range they calculated for the CPI is somewhere around 3% and the values are even higher in the first half of 2019.
- BNR projection for annual price inflation CPI
- CPI (middle value)
The values brought forward by the CNP in the preliminary autumn forecast and used by the Government for the future economic planning, including for the 2018 budget draft (together with the three-year projection required by the European practice in the field), are found in the BNR’s vision only at the bottom of the uncertainty range calculated. That would ask, as an utmost necessity, for implementing the most optimistic scenario possible, including from the perspective of the (obviously, uncontrollable) developments in the global market.So, with the eyes on the CNP’s forecast, we can only cross our fingers for the very robust economic growth and the ideal domestic inflation in the context of an increasing average salary toward a level of 700 euros.
Also let us imagine how the euro/leu exchange rate will decline for four years, back to the level of 4.50 lei/euro in 2021.
Lăsați un comentariu
Brussels offers Romania four months to take measures to correct significant deviation of structural deficit
The European Council issued on Tuesday a new recommendation, at the request of the European Commission, based on the significant deviation procedure, with Romania being… Mai mult›
In Romania, the ratio between the revenues that must be collected from taxes (including social contributions - tax/GDP ratio) and GDP was 26% in 2016,… Mai mult›
The nine ambassadors who met on Wednesday with Minister Tudorel Toader shared their "concern over the draft laws on the reform of the judiciary discussed… Mai mult›
Vitruvian Partners investment fund acquired about 30% of Bitdefender from Axxess Capital and becomes the second largest shareholder in the company, valued at over USD… Mai mult›
Split VAT at the Chamber of Deputies: Dilemmas of all kinds. Thresholds for outstanding payments have increased 10 times, Budget Committee to resume debates on Monday
The Budget Committee of the Chamber of Deputies has increased ten times the threshold of the outstanding VAT obligations from which companies will automatically be… Mai mult›
The Competition Council started an analysis, following the request of the Ministry of Agriculture, to establish the causes of the accelerated food price increase this… Mai mult›
Liviu Dragnea at the exit of the DNA headquarters where he was expected by a group of supporters and another of protesters. DNA prosecutors have… Mai mult›
Rompetrol saga, chapter about money: Government asks KazMunaiGaz to pay the historical debt and demand settlement of case in court
The extension of the memorandum between the Romanian state and KazMunaiGaz, the owner of the Rompetrol Group, will be discussed only after the company's historical… Mai mult›
"Not only we have not died, we rank third in the world" - Government approved second budget amendment, deficit of 2.96% of GDP
The second budget amendment this year has been adopted at the government meeting on Wednesday. As the Finance Minister assures, this amendment is "positive", the… Mai mult›
Mayors accepted on Tuesday in the negotiations with Prime Minister Mihai Tudose and several cabinet members, the promises made by the government officials to partially… Mai mult›
The establishment of own companies by local administration to manage the services at the local level is worrying for the competition authority, Bogdan Chiritoiu, President… Mai mult›
The ruling coalition registered with the Chamber of Deputies on Tuesday the draft amendments to the three important laws for the judicial system: Law 303/2004… Mai mult›
Negative opinion and analysis of Fiscal Council on tax changes. "Tax package" costs 5.2 billion, not planned at all
The Fiscal Council issued a negative opinion on the proposal to amend the Fiscal Code, according to the opinion published Friday on the institution’s website.… Mai mult›
The Economic and Social Council, a consultative body of the Parliament and the Romanian Government, issued a negative opinion on Tudose cabinet's draft amendment to… Mai mult›
Romania ranks 45th in the Doing Business 2018 ranking by the World Bank (WB), with a total score of 72.87 points, right under the Republic… Mai mult›