Romania sees record economic growth
Romania has seen record economic growth in the EU, after having advanced 7% in 2017 as against the previous year.
Leyla Cheamil, 15.02.2018, 13:13
The economic growth that Romania posted last year is definitely impressive. The National Statistics Institute (INS) announced on Wednesday that the country’s economy went up by 7% in 2017 as against the previous year. This is the most significant advance since 2008, a period also marked by sustained economic growth and followed by recession and austerity. According to the INS, in the last quarter of 2017 Romania had the biggest growth of all the 28 EU member states. An Eurostat report confirms this situation.
But how can we explain this significant economic growth in a country where the living standard is one of the lowest in Europe? According to the European Commission, the main engine for growth has been household consumption, stimulated by smaller taxes and an increase in salaries, but with little public investment for the second consecutive year. Economist Mircea Cosea says that Romania’s economic growth is a sign that real economy, the private economy, has results in Romania irrespective of difficulties.
Mircea Cosea: “If the economy continues to grow due to consumption or mainly due to consumption, this upward trend will not be maintained in the following years. That is because this type of growth is not sustainable, it goes up to a certain maximum level, as it happened in 2017, and then it starts to decrease, possibly as much as up to half its level in the previous year.”
Also on Wednesday, the Central Banks’ Board announced that the expected dynamics of economic growth remains robust in 2018, but it goes down in 2019. The National Commission for Prognosis has recently revised upwards, to 6.1%, the GDP advance estimated for this year, after an initial 5.5% forecast for 2018. Also, the World Bank has recently announced Romania is expected to report a 6.4% increase in its GDP for 2017 as compared to the 4.4% forecast in June.
Economic analyst Cristian Paun has signaled that economic growth is not always the same thing with development and that Romania’s economy has progressed due to the loans it took out, without any single new kilometer of motorway being built recently. He has also said that, if we take a look at the country’s economic growth in the past 25 years we see increased volatility, which means periods of sustained growth, followed by periods marked by spectacular economic decrease.
