Păuna, World Bank: Economic growth will have to be based on domestic demand

Economic growth will have to be based on domestic resources, with the expected salary increase to play an important part in stimulating demand as of 2011, but EU funds could also be an important factor in the GDP’s return to growth, according to Cătălin Păuna, senior economist of the World Bank’s Romanian office.
“Economic growth will have to be based on domestic demand. The expected salary increase will play an important part in stimulating aggregate domestic demand starting next year. At the same time, European funds are important resources that can be absorbed by Romania. It is necessary to remove the obstacles standing in the way of the development of the private sector, which has been significantly adjusted. I hope we will learn from the lessons of the crisis,” Păuna explained after a videoconference where Kaspar Richter, senior economist of the World Bank, presented the bank’s periodic report on the economic situation of the newest member states of the European Union – EU 10.
Base salaries in the public sector are set to rise by 15% next year, according to the wage law, but it will remain below the June 2010 level, when they were cut by 25% by the Government.