Businesspeople: Romania to go into recession in 2009

Romania will go into recession in 2009, with high unemployment, and economic growth estimated by authorities at 3-6 percent is considered unrealistic by representatives of the business environment.

"We are going into recession, which will result in unemployment and deflation, and methods of countering the economic decline are based on reducing and optimizing taxes, in order to boost consumption, and cutting employee and capital-related budgetary expenses," said Dinu Patriciu, General Manager of the Rompetrol oil company.

He added that the current financial crisis could reach its peak in the coming 3-12 months, and the state must stimulate the economy, including by reducing the value added tax (VAT) to 15 percent, and by adopting an adequate flat tax for the economies in the region. In Patriciu's opinion, a drop in economic growth to 1-2 percent from 9 percent means recession, and unemployed persons can be absorbed only by infrastructure and by large investors who could start producing in Romania if they are offered incentives for this.
 
Businessman Ioan Niculae, President of Interagro, a company operating in the grain and technical plants growth and the export of fertilizers for agricultural sectors, said that "the withdrawal of capital from foreign banks will continue to provoke shocks" in the Romanian economy in 2009. "I believe Romania is already in recession... I say that by looking at the sectors in which I operate, chemical, agriculture, food industry, and energy, which are in decline. Compared to 2008, which was a rather good year from an economic point of view, at least in the first half, in 2009, if the government does not intervene, the economy will drop," said Niculae. Businessman Adrian Porumboiu said that Romania cannot avoid recession.

Business Standard