Positive Economic Performance

With a 3.5 economic growth rate in 2013, Romania had a good start into 2014, while the positive signs seen in the first few months of the year show that its economy is becoming stronger and more sustainable. This idea has also been emphasised by the National Bank governor Mugur Isarescu who has made public this week a quarterly report on inflation. The Central Bank has improved its inflation forecast for the end of the year from 3.5 to 3.3%, following the good performance of all the factors that determine consumer prices.

Corina Cristea, 09.05.2014, 13:02

With a 3.5 economic growth rate in 2013, Romania had a good start into 2014, while the positive signs seen in the first few months of the year show that its economy is becoming stronger and more sustainable. This idea has also been emphasised by the National Bank governor Mugur Isarescu who has made public this week a quarterly report on inflation. The Central Bank has improved its inflation forecast for the end of the year from 3.5 to 3.3%, following the good performance of all the factors that determine consumer prices.

Mugur Isarescu: “The general trend shows an improvement with regard to inflation on all fronts. Consumer prices in the first quarter of the year stayed at almost 1% in all the first three months, January, February and March. Fruit and vegetable prices have continued to drop. There are no problems with regard to the labour market, in other words salaries are going up and their rise is connected to the level of productivity. The prospects in agriculture are also good, although we should wait for the farming season to be over to be sure.”

Governor Mugur Isarescu said the 1% inflation rate in the first months of the year was the result of good crops last year and the reduction in the VAT for bread products, as well as a drop in crude oil prices on the international market.

Cautious, Mugur Isarescu also spoke about a number of reasons why the inflation rate may in the end be higher than predicted. One such factor is the dynamic of prices for raw materials in international markets and the domestic food prices, the uncertainty with regard to the firm and consistent implementation of structural reforms in an election year and, more importantly, an unstable international environment.

The National Bank governor tackled the depreciation of the national currency against the US dollar and said that in his opinion this reflects the regional situation rather than the performance of the Romanian economy. He announced that Romania reimbursed most of its 12 billion euro loan taken from the International Monetary Fund in 2009. Bucharest has to pay back less than 10% of the entire loan by the end of the year.