Gross Domestic Product growth stuck in Baragan

Romanian economy last year registered a 1.6% growth in real terms, after three years of decline in a row. This growth was generated by the dynamics of the activity volume registered in the industry (6.1%), constructions (6.3%) and services (3.1%), said Constantin Chirca, vice-president of the National Institute for Statistics and Economic Studies (INSSE).

The value of the Gross Domestic Product (GDP) in 2000 reached 796,553.7 billion lei. The services registered the highest weight in the GDP, that is 45.4%, followed by industry -27.6%, agriculture- 11.4%, net taxes -10.8% and constructions -4.8%.

At the same time, the weight of the agriculture, forestry and fishery in GDP dropped 15.8% last year, mainly due to the drought.

The analysts have different views when it comes to the sources that help maintain the economic growth trend this year.

“This year, the economic growth can be generated only by exports again,” says Aurelian Dochia, manager of Societe Generale Advisors, the financial consultancy company of the French group in Romania.

He says that an internal demand boom is rather slow to occur and it will be capable of sustaining the GDP dynamics only after the economic growth is strong enough to create real revenues, which do not generate inflation and feed consumption.

Aurelian Dochia feels there is enough potential for an over 4-5% export increase in 2001. “The exports will be mainly influenced by the situation in the European Union, where demand is on an upward trend. This could materialise in the Romanian exports following the same trend,” Aurelian Dochia told Ziarul Financiar.

The increase in exports this year will not be as high as in 2000, therefore the growth will have to rely on public investment programmes, which have already been announced, according to Lucian-Liviu Albu, head of the Prognostics Institute of the Romanian Academy. “The governmental investment expenses will have to be the ones to push the economy forward,” Albu explains.

There is one more thing, though. The balance between the increase in expenses and the inflation containment has to be kept in a tight rein, given that a high budgetary deficit means high inflation. “The budget structure will set the trend of GDP,” Albu concluded.

As for this year’s growth forecast, Albu says the important thing is that the international financial institutions anticipate growth, too. The World Bank, for example, estimates a 4% increase for the Romanian economy this year.

The total consumption in the economy in 2000 registered a 1.7% increase compared with 1999, but the population’s consumption fell 1.2%, as a result of a 0,7% decrease in retail trade.

This decrease was, however, compensated by the increase in the total consumption of the public administration (4.2%) and of the private administration (1.8%).