Romanian Economic Standing in Europe

Romania is among the countries whose industrial production had the highest monthly growth rate.

Corina Cristea, 13.11.2014, 14:15

The most recent data from Eurostat, the European Office of Statistics, shows growth in industrial output in the Eurozone, as well as across the EU by 0.6% in September compared to August. Romania is among the countries with the highest monthly growth rate, more precisely in fifth place among the 28 member states of the union, with an output growth of 2.4%, behind only Croatia, the Czech Republic, Ireland and Hungary. According to Cristian Parvu, general secretary of the Romanian Business Association, this is a good performance, but one should not forget a range of structural problems, mainly related to the dependence on exports:

“The fact that Romania still has growth potential in exports is positive, and should make us happy, because this has to do with people, with jobs. At the same time, this sort of self-praise should be moderated by a few elements that no one brings up. One of them is the trade deficit, considering that natural gas imports fell by 65% as compared to last year, which shows that, instead of producing more and with higher value, we import. The second comment would be that our exports have the same extremely limited structure, and there should be a closer analysis to explain why Romania, a country that has oil, should import so much of it. And finally, in industry Romania is still extremely dependent on foreign demand, therefore it has a vulnerability which could, at any time, turn into a threat.”

Cristian Parvu points out that most of Romania’s exports go to European countries. Although this was seen as a positive thing before the crisis, now it has become a risk factor, considering that the Eurozone does not seem to have sorted out its structural issues. At the same time, a Bloomberg analysis notes that the Romanian executive has kept expenditure under control in order to keep the deficit below the 3% GDP ceiling set by the EU, which caused Romanian 10-year bonds to go from 5.3% interest to 3.7%. Statistics show that, in late October, Romania’s budget had a surplus, and, as part of the budget adjustment, more money was allocated to public works such as day cares, roads and sewers. According to Bloomberg, this expenditure may help Romania’s economic recovery.