Economists decided : We have to go back to consumption to restart the economyPublish date: 19-02-2010
Restarting the Romanian economy depends on the resumption of consumption, under the conditions where the share in forming the GDP is approximately of 70%. Exports help, but they can't relaunch an economy which is based on imports. « It is not real to say that exports will get us out of the crisis. We are not out of the crisis, but we have passed the maximum point. As a result, if exports cannot take us out of the crisis, although we do as much as we can, we have to get to consumption because, we like it or not, we are an economy based on imports" Florian Libocor, head economist at BRD - Societe Generale said.
Under these conditions, Romania will get out of the crisis when the unemployment rate starts to decrease, and the private sector starts to create new working places,Libocor considers.
"It is obvious that a country where the domestic demand has a share of 70% of the GDP cannot get easily out of the recession only based on exports" Ionut Dumitru, head economist at Raiffeisen Bank Romania says, but he mentions that the domestic demand is hard to stimulate as the unemployment is rising.
The Romanian economy could record an advance of 1.2% in 2010, according to the estimates of Raiffeisen while its growth potential is at approximately 4-5 %. Another important problem which Romania has to solve is fiscal consolidation, and the solution to the problem of the budgetary deficit is not in the area of budgetary expenditure reduction, Libocor considers, but in the area of increasing and improving the process of income collection. The BRD economist mentioned that budgetary income are reduced due to the black market.
« Black marekt is hard to estimate. Probably it is about 20-30% of what the official economy is" Ionut Dumitru said. The Raiffeisen Bank Romania economist considers that the following years Romania will have to stand the burden of fiscal consolidation as the reduction of the budgetary deficit will be hard to make.
The council of finances ministers in the EU extended with one year the deadline for Romania to adjust its budgetary deficit under 3% of GDP due to the worsening of the situation, more than expected.
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