| THE ROMANIAN ECONOMY CONTINUES TO GROW 09/09/08 |
| (2008-09-09) |
| Last updated: 2008-09-10 14:58 EET |
According to local analysts, the economic growth in Romania in the last quarter of the year, over 9.3 %, and 8.6% in the last 6 months, can only be a sign of overheating.
However, from the perspective of the governor of the national bank, Mugur Isarescu, the risk exists, but was quelled by tempering measures. Isarescu maintains that the flexible currency regime in Romania allowed the national bank to raise reference interest rates seven times in 10 months. At the same time, the central bank has further strengthened monetary policy to compensate for shortcomings in fiscal policy restrictions. However, said Isarescu, what is needed is reestablishing, on long term, a growth of labor productivity and revenues.
The governor estimated that Romania will keep having economic growth over the next few years as well, but with lower figures, at around 6% per year, considering the global economic slump, especially in the EU – the main market for economic products - and the evolution of world oil prices, farming productivity this year, the volume of direct foreign investment, etc.
The governor announced that Romania still aims to join the Euro zone in 2014, on condition of controlling inflation, in parallel to reducing the current account deficit, which remains the main risk factor. He provided assurances that in 2008, in spite of it being an election year, the deficit would not exceed 3% of the GDP. In his opinion, in the next 2 or 3 years, Romania has to apply policies to allow the gradual reduction of the deficit to the level of it being covered in its entirety by direct capital investments.
Such correction can only be achieved through a combination of monetary, fiscal, and income policies, matched by faster structural reforms leading to higher work productivity. The governor is also optimistic about the annual rate of inflation. He said that, in August, that figure had a record level of 9%, and by December it could go down to 6%.
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2025-04-03
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