When will the economy recover?

Romanian economy must restart engines, politicians in Bucharest agree, while government is looking at new measures to support this process.

Corina Cristea, 30.04.2020, 14:00

The coronavirus pandemic has generated a lot of heated
discussions worldwide about how to solve the current health crisis while also
addressing the economic crisis. Romania, where some one million people have
seen their work contracts suspended, is no stranger to such debates. The government
has already taken some measures to support the business environment and, by
extension, employees, and is still looking for solutions to diminish the impact
of the pandemic on the economy. According to initial estimates, the Romanian
economy shrank by 30-40% during the first month of the state of emergency
instated in mid-March.

The economy minister Virgil Popescu, who made an x-ray
of the situation in an interview on Radio Romania, explains why in his opinion
this drop does not reflect the real state of affairs:

When we come out of this state of emergency and
have clear confirmation that the pandemic is on a falling trend, we will be
able to see exactly how the economy starts to recover. As I’ve said before, the
car making industry is very slowly beginning to recover, and the car parts industry
began to pick up again on 13 April. The companies in the textile sector have
moved quickly and have begun to produce essential materials such as face masks,
coveralls, coats and shoe covers for medical use.

The economy minister says he is expecting other
industries to resume activity and for some to even readapt very quickly. Virgil
Popescu:

I think the energy industry will recover very
quickly. The national energy grid has worked very well, has been very stable,
there were no problems. However, there’s been a visible drop in consumption,
and a drop in consumption obviously leads to a drop in revenues, in profits. I’ve
asked energy companies to come up with a very clear plan of investments for the
next five years, with very clear deadlines. Let’s not forget that Romania is engaged
in the Green Deal European project and there’s a lot of investment to be made,
so I think some very extensive investments will be launched in this area. In
the defence industry, following talks I’ve been having with the ministry of
defence for the last two weeks, we’ve decided to kick off the strategic projects
we began before this crisis, projects that must be continued. I’m also
following closely the relocation of certain industries away from Asia, China in
particular, and I won’t rest until I convince some companies to reinvest and
start new production lines here in Romania.

Another sensitive area is the entire hospitality
industry, which has been very badly hit by the crisis. Minister Virgil Popescu is
cautious about the restart of the Romanian tourist sector very soon, but says a
package of measures is being considered to help hotel owners reduce their
maintenance costs. The state is also looking at ways to help restaurants, cafés
and bars to make the necessary adjustments for when they reopen in order to keep
their customers safe. (CM)