Crisis sweeps through Romania's economy

Publish date: 29-12-2008
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“The answer is clearly no. The international financial crisis will not affect Romania’s economy or its citizens,” said former Prime Minister Calin Popescu Tariceanu in mid-September 2008.

Moreover, Tariceanu saw the U.S. financial crisis as a huge business opportunity for Romanians, who could have bought homes across the ocean, considering the downward trend on the American Real estate market.

Only three months after these statements, Romania is expecting over 50,000 unemployed, has fewer investors, closed factories, the national currency hit the low of the past four years against the euro, and the Stock Exchange collapsed.
Romania did not seem to be affected by the crisis early in 2008, while a tide of bankruptcies in the banking system swept through the economies of the U.S. and Western countries, and large central banks injected huge amounts on financial markets.

While Fed announced in January a cut in its benchmark rate of 0.75 percent – the most significant cut until then – to stop the “bleeding” markets, the leu appreciated at the beginning of 2008.

Entrepreneurs were desperate to find hundreds of thousands of employees to cover the labor force deficit. Romania’s economy was booming, ignoring the financial crisis. Local banks, many of which are branches of international financial groups, continued to grant loans, in conditions far more relaxed than in 2007. 

Business Standard

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