Investments and exports growth - the way out of the crisis

The internal consumption of goods and services should decrease by 5 percent of GDP in Romania, while in the future the economic growth of Romania should rely especially on investments and exports, Valentin Lazea, chief economist of the National Bank of Romania (BNR), declared on Tuesday at a conference on financial themes.

He stated that the monetary, fiscal, salary, pension and structural policies must collaborate in order to limit the uncontrolled growth of consumption and to stimulate internal savings, investments and exports.

Lazea estimated that in the event that there is a strong pressure in favour of the appreciation of the RON, BNR will have to fight this tendency in order to stimulate exports.

Referring to the other policies for the limitation of consumption growth, BNR official gave the example of the growth of excises, the increase of the salaries strictly correlated with the growth of labour productivity and the return to a system of pensions with definite contributions, not with definite benefits (a pension point equal to 45 percent of the average salary).

The reduction of internal consumption by 5 percent of GDP would determine a better adjustment of the current account deficit from an average of minus 10 percent to minus 5 percent, as it happened also in the crisis year 2009.

During 2001-2008, in GDP structure, the investments had an average weight of 25.3 percent an appropriate level according to BNR representative, the total final consumption represented 84.5 per cent, while the net export had a negative influence of minus 9.8 percent.

The BNR official warned that the foreign investors are becoming increasingly skeptic about financing countries which live on debt, and these countries will be penalized by investors if they don't change the model of economic growth based on consumption.

"The adjustment that Romania must make involves the modification of the economic growth model based on consumption, on debt, towards a growth based on exports and investments," BNR chief economist also said.

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