Romania sees record-high economic growth

Romania has the highest economic growth rate in the European Union, an incomparably better situation than in 2016, Bucharest says.

Mihai Pelin, 15.11.2017, 13:33

In the 3rd
quarter of the year Romania saw the most substantial rise in GDP of the 28 EU
member states, by 8.6% compared to the corresponding period of 2016, according
to the European statistics office, Eurostat. Romania’s economy also grew by
2.6% in the 3rd quarter of the year compared to the 2nd,
again a EU record. Prime Minister Mihai Tudose says this spectacular rate is
sustainable. He wrote in a social network post that although Romania currently
has roughly the same number of employees as it did in 2008, its nominal GDP is
71 billion euros higher than in 2008.

Experts,
however, are not very confident that the economy will keep up this pace.
Analyst Aurelian Dochia talks about the risks that might slow down the economic
growth, such as a rise in inflation and interest rates:

It is rather
unlikely that the economic growth rate stays at this level in 2018. Without
doubt, some of the aspects that seem harmless today might be different next
year. And I believe one of the most
alarming elements is related to the budget deficit. We must also keep in mind
that some indicators, such as the interest rate, have started to go up very
quickly, and the inflation rate is already above the levels that even the
National Bank has expected. This puts some pressure on the exchange rate, and
this is something that many people are concerned about.

An economic
growth rate above expectations is welcome, in that it gives Romanians hope that
they will be able to bridge the gaps separating them from the more developed
Western European countries, says Adrian Vasilescu, a central bank strategy
consultant. But he also warns against the high level of imports:

Those who
criticise the economic growth claim it relies on consumption, but growth is
always based on consumption. The problem is elsewhere, namely that it is an
economic growth rate based mainly on the consumption of imported goods. This is
the problem that we need to address, because if we continue to rely on high
consumption of imported goods, it will not be good.

A high economic
growth rate is the only way to improve living standards, the Finance Minister
Ionut Misa said in his turn, and added that Romania is now one of the EU’s most
dynamic economies, and its development direction is appreciated by investors
and international institutions.