Severe contraction of the Romanian economy

Romania is experiencing economic difficulties like any other country affected by the COVID-19 pandemic and the authorities have announced measures to cope with the situation.

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Daniela Budu, 14.04.2020, 13:50

International experts warn about a global recession in the context of the coronavirus pandemic if countries do not take the necessary measures to combat the crisis. The Romanian economy has already contracted by 30-40% due to the current crisis, the economy minister Virgil Popescu has estimated.

In an interview to Radio Romania, the economy minister said that the car sector, tourism, transports and the hospitality industry have been the most affected by the restrictions imposed by the authorities. But, the government is preparing new measures and instruments to support the business environment, among which direct financial aid worth 750 million Euros for SMEs.

Virgil Popescu: “The package of measures will be tailored in such a way to re-launch the economy and to get back to the situation we were in at the beginning of the crisis, and not to compensate for the losses incurred. We want to re-start the economy gradually and return to the situation we had before the crisis. I also believe that it is very important to think of what we’ll do after the crisis, and especially of what we’ll do from a strategic point of view in Romania, on medium and long terms. Once the crisis is overcome, we need to think about the future of the Romanian economy, because, in my opinion, which is similar to that of the other colleagues in the government, nothing will be the same as before.”

As regards the situation of the Romanian economy in an international context, minister Virgil Popescu said: “We have to try to ‘take advantage’ of this pandemic, so to say. I believe that very many industries outside Europe will be relocated in the European zone, and I think that we should not miss this opportunity and be prepared to be able to receive new industries, new investments in Romania, which will obviously create new expectations for Romanians and for the Romanian employees.”

Studies conducted by international experts on the impact of the current sanitary crisis on the Romanian economy show a risk of entering a period of recession and of losing the race to the advantage of regional competitors. An analysis of the Businesses Development Consulting Agency shows that the Romanian economy risks collapsing if the authorities delay working out concrete solutions to the unprecedented crisis caused by the coronavirus pandemic. The analysis shows that the economic effects of the crisis are intensifying, which will leave more than 2 million people without jobs, thus causing a severe recession.

At the same time, Romania risks losing the race for competitiveness to several states in the region such as Poland, Hungary and Bulgaria. So far, more than 215,000 people have lost their jobs in Romania and more than a million are in technical unemployment, according to figures provided by the Labor Ministry. (tr. L. Simion)