The engine of economic growth

First-half economic growth was of 2.1%, but analysts do not expect this trend to be maintained over the second half of the year. However, the objective established for the entire year related to an economic growth of 1.3-1.5% will be met, nevertheless.

“I believe that, for the entire year, economic growth will stand at 1.5-2% but investments being blocked at the same level is not a positive fact, as they are the engine of economic growth,” says Lucian-Liviu Albu, the director of the Prognosis Institute within the Romanian Academy.

“The growth was natural, but it seems authorities were not prepared for it, as they are currently trying to increase interest rates. What about investments? Their problem is not solved, not even if the exchange rate is saved,” Albu adds.

Gabriela aendroiu, general manager of CA IB Securities Romania, believes that in the second half of the year the drought’s effects will lead to a minus in agriculture and the industry might not compensate the losses.

“Moreover, crude oil imports, which are usually made during the last two months of the year, will involve even higher budget expenditures,” aendroiu said.

Ashok Bathia, a manager with the rating agency Standard & Poor’s, stated that the results obtained by Romanian authorities as to economic growth were “extremely positive,” but added this did not involve a change of the evaluation results.

“There is still much to be done in the domain of macroeconomic policies, but inflation is the most important issue,” Bathia said.

On the other hand, Gabriela aendroiu believes that prolonged negotiations with the International Monetary Fund point to the existence of divergent opinions, but at the same time reflect IMF representatives’ suspicions, generated by upcoming elections. It is likely for the target to maintain the budget deficit at 3.8% of GDP to be modified. On August 31, the state budget’s deficit was of 22,407.9 billion lei, against an annual programme of 31,567 billion lei.