Romania’s economy will rebound by 7% this year according to estimates but growth is expected to slow next year before picking up in 2023, according to presidential adviser Cosmin Marinescu.
“Growth is a post-lockdown recovery effect, that is, the peak and not the basis of recovery,” the economic adviser to President Klaus Iohannis wrote on his blog.
“All estimates indicate a significant slowdown in growth for next year and a possible acceleration in 2023,” as investments from the resilience and recovery plan are implemented, he wrote.
Romania needs investment and structural reform to generate sustainable growth from investment. “The government’s goal of having 7% of GDP for investments in the 2023 budget is welcome „, he said.
In a post headlined ‘Post-pandemic economic policy challenges’, the economics professor said Romania needed to end a vicious circle of „so-called” development budgets „, with “generously budgeted but unrealized investments,” which merely fueled the budget deficit.
He said the only way to guarantee investments are successful is to „strengthen the administrative capacity… in terms of quantity and quality of investment projects, especially those involving European funds.”
Romania needs structural solutions that focus secifically on attracting investments in infrastructure, the absorption of European funds and the implementation of reforms Romania has committed to “increase our economic potential”, he said.
He said the pandemic had generated “budgetary needs and specific financial measures,” many of them urgent. But he warned that underlying macroeconomic vulnerabilities preceded the pandemic and are “strongly pro-cyclical economic policies.”
They meant Romania had one of the largest budget deficits when the pandemic began, even though economic growth was high.
Increasing budget revenues, currently the lowest levels in the EU, is „essential”, but in the absence of „fiscal consolidation becomes an impossible task”, he warned in his analysis posted Wednesday on his blog.
Romania’s economy increases by more than 13% in the past year
