Romania is half way through bridging tech gap with the more developed countries, World Bank saysPublish date: 17-01-2008
The gap between Romania and the more developed states has been narrowed over the past years, yet the economic indexes are still half the level posted in other countries, chief economist of the World Bank, Hans Timmer said.
The World Bank places Romania on the top level of the countries with average incomes regarding the development of technology. As for the economic development, Timmer deems Romania's main issue is the macroeconomic stability considering the widening of the current account deficit. Also, the market seems to be more sensitive than those of other states in the region to the roars of international financial markets, Timmer added.
Romania should go for a more prudent fiscal policy, Timmer said. Looking at the reversed image of the country's deficit which means debts, one can notice they come from consumption, Timmer explained.
Romania's Central Bank Governor Mugur Isarescu repeatedly warned about the wrong investments made before 1989 which formed the current consumption structures.
The gap between offer and demand is also difficult to bridge, while tensions aroused by the hike of salaries surpassing productivity still remain.
Romania's trade deficit widened 52 percent in the first eleven months of 2007 reaching 19.4 billion euros, according to data from the National Statistics Institute (INS). The current account deficit reached 13.3 billion euros in October, widening 71.8 percent in the first ten months of 2007 from the previous year.
The central bank repeatedly asked for a less generous tax policy over the past three months considering that Romania saw a yearly inflation of 6.57 percent last year. This exceeded the 5.7 percent target aimed by BNR.
Romania's central bank raised its interest rate on January 7, to 8 percent, as inflation quickened to 6.7 percent in November and 6.6 percent in December, beating the bank's estimates.
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