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Estimates on the Romanian Economy 2013
- Tuesday, 08 October 2013 03:00
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In spite of the fact that international financial institutions, the Romanian government and economic analysts estimated at the start of the year that Romania will register an economic growth rate of 1.6% in 2013, they have recently revised upward the growth rate. For instance, the International Monetary Fund has improved the economic forecast for this year to 2% and to 2.5% for 2014, against the backdrop of bigger exports and a better agricultural output than in 2012. The IMF estimates that Romania’s current account deficit will further decrease to 2 or 2,5% of the GDP this year, and the inflation rate will also go down by the end of the year, within the limits targeted by the National Bank of Romania.
The head of the IMF mission to Romania, Andrea Schaechter, has said that “as regards the fiscal policy, the Romanian government is determined to achieve a gradual fiscal consolidation. Once the budget revision announced, the government made public its decision to reach a deficit of 2.3% of the GDP on cash and 2.4% on the European System of Accounts (ESA) this year, as well as a structural deficit below 1% of the GDP until 2015”, says Andrea Schaechter. She has mentioned that the fiscal policy will be supported by institutional reforms, including measures to stimulate medium term planning, develop the administrative capacity, speed up the absorption of European funds, consolidate fiscal administration and governance and ensure a better control of arrears.
Nevertheless, according to the September report issued by Economist Intelligence Unit, Romania’s economy will go up by 2.5% in 2013, which “mirrors the situation in the Euro zone, with the growth rate expected to increase considerably in the 2014-2017 period, up to an annual average rate of 4%”.
The vice-president of the European Investment Bank, Mihai Tanasescu has said that in order to ensure economic growth, which is essential to absorb European funds, Romania should take some steps: “We stand a big chance, an unique chance that other countries don’t stand, namely the opportunity to attract more European funds, to be able to use cheap investment money, such as those coming from the European Investment Bank, to be able to use resources for big projects, so that the economic growth rate reaches Romania’s potential, of 3-4%. This thing is achievable, in 2-3 years’ time. This potential can be reached.”
According to the aforementioned report drawn up by Economist Intelligence Unit “a better absorption of European funds will contribute to the investment in infrastructure and subsequently might lead to an increase in Romania’s exporting potential on the long term. Romania has obtained structural funds worth 22 billion Euros from the EU budget, for the following budgetary term. Romania will also receive funds for agriculture, worth 17.5 billion Euros in the 2014-2020 period, under the Common Agricultural Policy, which is a significant increase from the 13.8 billion Euros in the 2007 – 2013 period.
The First Economic Results of the Year 2013
- Friday, 12 April 2013 13:18
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The Prime Minister Victor Ponta on Tuesday made public the economic results registered by Romania in the first quarter of the year. Figures show that exports increased significantly, by 8%, and the country had the lowest deficit of the trade balance in the past 10 years (some 200 million Euros). Therefore, Romania managed to meet the deficit target agreed upon with the International Monetary Fund.
The industrial output also increased by 4.6% in the first two months, and VAT returns, excise duties and income taxes went up by more than 10% as compared to the same period of last year. In exchange, the Prime Minister also announced the bad news of a significant decrease in profit taxes. In his opinion, the insolvency law should be amended, because there are many companies that are unable to ensure a crediting flow and fail to meet their obligations to the state budget and to their suppliers. Such companies fraudulently go into insolvency and no longer pay taxes just like other firms which operate in the economic market.
The Prime Minister has said the government should amend the insolvency law, to help companies that are truly insolvent and to penalise those how fraudulently go insolvent.
As for the privatisation of the state-owned railway corporation, CFR, and the natural gas carrier, Transgaz, Victor Ponta has said there is a significant over-subscription of their shares, and this is a sign of confidence and of a development potential. He has added that the current budget discipline might be toughened in the ensuing months, and this is a guarantee that the Romanian economy might continue to follow an upward trend.
Romanian Agriculture and its European perspective
- Thursday, 07 July 2011 03:00
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The European Commissioner for Agriculture, Dacian Ciolos has said ”Romania will be one of the few member states to benefit from the future budget of the common agricultural policy, that is, it will enjoy a larger financial allocation than now, both for pillar one and for rural development, but it will have to define its objectives in agriculture, and pay special heed to the three major objectives: food safety, the good management of natural resources and the cohesion of the rural territory.”
Romanian agriculture minister, Valeriu Tabara has set the main objective as redressing the trade balance for foodstuffs. He has said ”Romania has the potential to produce and not to demand, to export and not to import wheat and corn. I am confident that in two-three years’ time, Romania’s agriculture will find itself in an area that won’t just boast high potential, but will also boast a basis for partnerships, in the Romanian and foreign markets.”
The balance of payments deficit in agricultural products fell last year. Sources with the Agriculture Ministry say imports in 2010 amounted to 3.8 billion Euros and exports, 3 billion Euros.
Investments in the economy increased by 20% in the first quarter, half of them in the construction field
- Tuesday, 18 September 2012 14:25
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The National Institute of Statistics (NIS) announced that investments in the economy rose in the first semester, compared to the same period last year, by 20%, to 28.89 billion lei, after an advance of 19.5% in the second quarter compared to April-June 2011.
In the second quarter, investments regarding the equipment (including vehicles), increased by 28%, and new constructions, by17.1%, but decreased by 3.7% to other expenses category.
In a statement of the NIS it is said that "compared to the second quarter of 2011, in the second quarter of 2012, there is an increase of the percentage of equipment (including vehicles) in total investment by 1.7 percentage points and in new constructions by 0.2 percentage points. The share of investments in other expenses decreased by 1.9 percentage points".
Investments that have materialized in new constructions summed 14.925 billion lei in the first semester, representing 51.7% of the total, compared to 51% in the first semester of 2011. Investments in machinery and transport equipment summed 11.715 billion lei, representing 40.5% of the total, compared to 39.8% in the first semester of the year.
Branches which registred a higher volume of investments are in industry and commerce / services (wholesale and retail trade, the repair of motor vehicles).
National Bank data shows that foreign direct investments had a decline of 28.9% in the first semester, reaching 621 million Euro.Business Opportunities in Romania
- Wednesday, 04 May 2011 03:00
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In 2010, direct foreign investment in Romania amounted to 2.6 billion Euros, registering a 25.5% drop as compared to the previous year. A report issued by the Austrian Group Erste shows direct foreign investment in Romania will go up when global economy picks up, and it will be channeled towards such sectors as industrial goods, agriculture, the food industry, and the IT&C and renewable energy industry.
Labour productivity in the processing industry increased by over 12% in both 2009 and 2010, while the real increase in wages was smaller”, the Erste analysts say. Some of the main trump cards which make Romania an area of interest for foreign investors are its size, as it is one of the largest markets in Central and Eastern Europe, as well as its location at the crossroads of three European transport routes- namely corridors no. 4, 7 and 9. Additionally, the labor force is generally well trained, boasting thorough technological, IT and engineering knowledge. Other advantages are natural resources, including farmland, oil and natural gas reserves, and a huge tourist potential.
At a recent meeting with potential investors from Gulf countries, the governor of the National Bank of Romania, Mugur Isarescu said that our country offers many, diverse and solid profit-making investment opportunities on long term. Isarescu said Romania’s economy has stabilized.
Mugur Isarescu:”I think that infrastructure in general, and not only road, but also naval infrastructure, such as the port of Constanta and Galatz, offer important business opportunities. They are the extremely efficient gateway to Europe. The Danube is a navigation channel which takes us to the heart of Europe. A second area is, undoubtedly, agriculture, and I’m not referring only to all those forecasts on the deterioration of the food situation at world level, but also to Romania’s still unused potential: tracts of land, tradition, labour force and the European funds it can attract. I think legislation in the field of agriculture should be improved, because both Romanian and foreign partners, as well as banks, will be reticent to fund small or very small properties, which stand low chances of becoming profitable. Finally, energy is the third area. Romania boasts a longstanding tradition in this field, and I think it can be successfully capitalized on.”
In turn, Andreea Paul Vass, the counselor of PM Emil Boc, has made public some of the methods the Romanian state is using to support the business sector and investors. First of all, the state uses state assistance schemes for investments exceeding 5 million Euros and which lead to the creation of at least 50 jobs: ”The state assistance scheme has been improved and it became significantly more flexible during the economic crisis, because it was extremely difficult to find investment to create minimum 300 jobs, as had been the case before and it was equally difficult to draft investment plans worth at least 100 million Euros. This state assistance scheme allows for the return of 50% of the value of the investment plan, but no more than 28 million Euros.”
Thanks to this scheme, 10 major projects worth over 700 million Euros have received funding worth 215 million Euros. Approximately 5,000 jobs have been created.
