Mugur Isarescu: Slowdown of economic growth is not recession, its politicization

The slowdown of economic growth but its maintenance within a positive rhythm that for some is too low does not mean recession but rather politicization, Mugur Isarescu, the Governor of the National Bank of Romania (BNR), stated yesterday within the 'Young Economists' conference.

'A weaker economic growth, a positive rhythm that according to some is too low, that means politicizing. It no longer is our science. We leave it to the politicians, but we have to keep our standard, to use the notions,' Isarescu stated for Mediafax. The BNR official has pointed out that recession is technically defined as negative GDP growth registered during two semesters. 'If we do not understand what recession is and say that an economic growth of 4 per cent is a recession, then communication is lost,' Isarescu said.

In H1 Romania has registered a GDP growth of 8.8 per cent, while in Q2 the economic growth stood at 9.3 per cent. Isarescu reaffirmed the importance of the current account and the importance of the currency exchange rate evolution for the Romanian economy. 'The current account and the balanced exchange rate are of maximum importance for Romania's future,' the BNR Governor added.

GDP growth higher than 6 per cent keeps inflation rate high

A GDP growth higher than 6 per cent will keep the inflation rate at high levels, with the return of the consumer price index at a level below 3 per cent being highly unlikely, according to Valentin Lazea, the chief economist of the National Bank of Romania. 'Any GDP growth that surpasses 6 per cent, which is the economy's potential, keeps the inflation rate at high levels and the inflation's drop below 3 per cent is highly unlikely.'

According to him the Central Bank maintains its goal regarding Romania's accession to the Euro Area in 2014. He added that Romania should have a current account deficit of 10 per cent of GDP, in order to reduce the gap that separates it from other European states. According to him, the difference between the 14 per cent of GDP deficit estimated for this year and the 10 per cent of GDP deficit represents an excessive deficit determined by excess consumption.

Stimulating savings - a necessity

The economic policies should be aimed towards stimulating savings, Ionut Dumitru, the chief economist of Raiffeisen Bank, has stated during the 'Young Economists' conference, Agerpres informs. In his opinion, the interest rates that the banks offer are currently very stimulating, being 'somewhat larger than a neutral interest rate.'

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