Romania’s economic growth continues

In the third quarter of 2017 Romania reported the highest GDP increase of the 28 EU member states

Bogdan Matei, 08.12.2017, 13:14

Converging with the specialised Romanian institutions, the European Office for Statistics (Eurostat) has confirmed the growth of Romanias economy. According to the revised estimates published on Thursday by Eurostat, in the third quarter of 2017 Romania reported the most significant GDP increase of the 28 EU member states, both compared to the same period of last year and to the second quarter of this year.

Economic growth has been reported practically across the community space: the GDP of the Euro zone and of the European Union has increased by 2.6% as against the same period of 2016 and no member state has reported any drops. Romania is in the lead, with 8.6%, followed by Malta with 7.7% and Latvia with 6.2%. Also according to Eurostat, Romania has the second lowest taxation level in the EU after Ireland, with the revenues from taxes only accounting for 26% of the GDP.

Therefore, macroeconomic data fuel the optimism of the Social Democrat PM Mihai Tudose, who said that it was for the first time that Romanias GDP exceeded 200 billion Euros, which would allow for the salary and pension increases that have been promised repeatedly by the governing coalition made up of the Social Democratic Party and the Alliance of Liberals and Democrats.

But the right-wing opposition, trade unions and economic analysts are less exuberant. They argue that Romanias economy is a much more vulnerable “tiger than it seems, that the economy is overheated and that the record growths reported are based on consumption and on imports. In turn, the leaders of the big trade union federations organised several protest rallies in Bucharest this autumn. They say the fiscal reform planned by the Government will lead to decreases in salaries and even to job losses, because of the transfer of social security payments from employers to employees.

Previously, President Klaus Iohannis had labeled the government project a fiscal chaos, following which people earning an average salary will only receive 70 eurocents more to their salaries.

In reply, the PM Mihai Tudose and his party chief, the Social Democrat leader Liviu Dragnea, said they did not understand the opposition to the measures announced by the government for next year, since both employees and employers would be at an advantage.

According to commentators, we will know more about the real prospects of the Romanian economy after the endorsement of the state and social security budgets for 2018. Based on an estimated economic growth rate of 5.5% and on an average annual inflation rate of 3.1%, the budgets are to be adopted by Parliament on December 21. According to the timetable set Thursday by the joint standing bureaus of Parliaments two chambers, amendments can be brought to the draft laws put forward by the Government between December 7th and 16th, and on December 18 debates will be held in a plenum session.

(translated by: Lacramioara Simion)