ROMANIAN ECONOMY HIT BY CRISES IN 2015: GDP, INFLATION, ECONOMIC DATA
Monday, 19 January 2015 at the headquarter of Institute of International Relations and Economic Cooperation the first economic forecast conference for 2015 has taken place: The info date and prognosis of evolution of Romanian economy in crisis 2015. The aggravating crisis!
The conference has united economical experts from Romania and European Union, economical supervisors and personalities of political, economical and academic life of Romania.
2009- 2014 –the first stage of world crisis and impact on Romanian economy.
Three hundred economists, bankers and economic journalists attended the economic conference.
The conference started with an evaluation of the first wave of impact of economic crisis in the recent period: 2009-2014.
In 2012-2014 the economist stated in a voice that: the economic crisis has affected the vital areas of economic life: the collapse has started with construction industry and construction material factories and collapse continued by the real estate market shrinking.
Others affected sectors where: insurance, banking and stock exchange and in all the financial sector was strongly shaken down.
The consumer confidence has fallen sharply and the Gross Domestic Product (GDP) has being reduced with 10% in 2010 and 8% in 2011 to decrease further with margins between 2-3% in 2013 and 2014.
The decrease in Romanian economy has being so devastating, today we are below the 1996 level-the record law of Romanian economy.
Unfortunately, the economic collapse of 2012-2014 has laid the foundation for a crisis without equivalent in Romanian history that will affect the country in 2015.
2012-2014: The period of economic disaggregation of Romanian economy.
2012 and 2014 will be remembered as the worst years of recent economic turmoil in Romania, had appreciated in one voice all the experts present at the gathering.
In 2013 and 2014 the Romanian economy had started to show signs of deep financial crisis.
The banking and insurance system has being especially hard hit and this had made the fragile Romanian economy to reach the breaking point. The inflation had resurfaced and the experts appreciate that a 10% percent yearly inflation is unavoidable.
The resurgence of inflation had put a dramatic pressure on population economy and had made any recovery unthinkable for the next 4-8 years.
The collapse in economic system, the fact that internal and external investments had being reduced to minimum, the credit on internal market has being practically suspended, all this factors had provoked for 2012-2014 a record economic decrease of more than 15% of GDP or even 18% of GDP after others opinions.
A factor not to be neglected in amplification of the crisis is the governmental incompetence that by increasing the taxes, legislative chaos and a deliberate politics of destroying the middle class investors in the favor of big companies succeeded only to aggravate the economic crisis.
2015 – The maximum point of economic crisis.
The 2015 will be a decisive year when Romanian society with 70% of population living below poverty line will be confronted by the ripple effects of European meltdown.
Until now the Romanian economy was hit hard by his own faults like: reduced productivity and competitiveness, chaos in the governmental policy, crippling inflation etc.
In 2015 Romania will be affected by the decay in European economic activity, effects of anti-Russian sanction and the redraw of investor from the Eastern Europe market in the aftermath of Greece and Hungary crisis.
Crisis hit Spain, Greece, and Ireland and slowing down economy of Germany, France and Great Britain, will impact negative on Romanian chances to get access to European funds and foreign investments.
Romanian economy and policy maker are not yet conceptual prepared to understand that Romanian EU membership had become a liability and a negative factor in the future of Romania, appreciated the representative of Foreign Export Company Association Mr. Marcel Alexandru.
The negative impact of European Union financial and confidence crisis will account for a 2-5% percent reduction in Romanian GDP this year.
2015 will be without a doubt a period of a new catastrophic decline.
It must be very clear, all economic experts underlined, that the present economic decline will last for at least a decade at European level, so all those opinions that declared that Romania will start a new economic growth before the next 10 years; either don’t know what they are saying, either are bluntly laying.
All the European statistics are speaking about the lost decade of Europe between 2010 and 2020 , term referring to the blocking of economic development at continental level and the frozen of present situation for a decade.
Those that are declaring that Romania will surpass the period of recovering of France or Great Britain economy , are telling stories that are unbelievable , stated chief economist Mihail Raceanu. What is important is to succeed that we have in 2015 a decrease in real economy of less than 10% and in the interval between 2015 and 2019 to stop the decline and in 2020 to start the recovery.
2015 budget-A budget of economic crisis.
In 2015 the Romanian economy is coming to the fore not only with the negatives trends of the last years and a crippling luck of funding and investment but also with a budget of austerity that will direct Romania to plunge into a new economic meltdown.
The 2015 budget is impacting Romanian economic stability and is giving a sign of chaos in the government economic policy.
The budget expected deficit of 2, 1% percent of GDP it not offering any chance for a real economic recovery, massive investment projects are abandoned and the decline in the economy is estimated by independent economist around 3-6% percent of the GDP by the year’s end.
What is dramatic, is the reduction in the direct investment in the economy, with less than 1 billion euro investment planned for this year, the Romanian economy had to struggle for sustainability.
Reduced foreign investment and dramatically shrinking internal private investment means that Romania will have now more that 2 billion euro (in an optimistic assessment) for investment programs.
The country needs at least 20 billion per year to modernize the economy and to have a decent growth rate of 1-2% percent per year.
The present day budget of 2015 is not only of severe austerity, but of severe contraction, stated the economists present at the meeting.
Romanian economy recover postponed to 2050.
This assessment was a strong one, keeping in mind that the pre-crisis governmental statistic declared that in 2025 Romania will succeed in recuperating the gap and reach the level of industrial activity prior to 1989 Revolution.
This perspective is no longer feasible, a new perspective is appearing after the crisis and after the lost decade and a cumulative GDP decrease of more than 60% from 2007 economy level.
The economic recession will make it hard for Romanian economy to recuperate the last loses in the context of zero governmental involvement, the general economic climate of recession and finally the worst factor of all: the burden of external debt.
The collapse in economic system, the internal and external investments will be reduced to minimum, the credit on internal market will be suspended and all this will provoke this year an economic decrease of more than 5% of GDP or even 8% of GDP after others opinions.
External debt risk can plunge Romania into financial meltdown.
The fear factor that will suffocate Romanian economy in the next period will be, after 2015, the foreign debt crisis.
The government has careless accepted more than 36 billion dollars credit and in total: the private and state debt of Romania is reaching the unbelievable sum of 95 billion dollars, this only if the government will no longer accept new loans.
Despite the writing on the wall, in all of cases like: Greece, Spain and Ireland, Romania is accepting new loans from International Monetary Fund, loans that will not be invested in developing and modernizing the economy but in salaries and pensions.
This consumer invested loans at extortionate interest rates, will suffocate completely an ailing and failed economy as Romanian economy is.
Another gloomy factor is the unemployment: with a rate of registered unemployment of more than 15% of the active population and with another 15% percent of the population already left out of the governmental unemployment aid, Romania tops many EU member countries with a real unemployment figure of more than 30% of the population.
This figure must be put in perspective with more that 70% of the population below the poverty line and the full picture of the economic meltdown and social tragedy could be analyzed.
Romania economy is in crises and no plans for a future development had being adopted.
2015: The economic crisis.
The conclusion of the most important economic experts in Romania was clear: the crisis is not over by far, but has entered in a more difficult phase that will affect financial and banking system and economic fundament`s.
The economic crisis will continue until 2017 at the earliest and a coming back cycle that will last until 2025.
This decade will be, without a doubt, the lost decade of Romania, but if the necessary measures are not rapidly taken to re-establish control on economic decline than we risk that Romania economy will not come back not even in 2025.
On 13 of January 2015 a welcoming and protocol meeting in the honor of the new Ambassador of D.P.R.Koreea-H.E. Ri Kwang IL has taken place and reuniting a group of Romanian personalities from academic, diplomatic, parliamentary and business community.
Prof. Dr. Anton Caragea, President Director-General of Institute of International Relations and Economic Cooperation express his heart-felt congratulation on the occasion of beginning of mandate of H.E. Ri Kwang IL, appreciating that between Romanian and D.P.R.Korea we can observe a large area of common interests, designed to forge a good understanding between the two nations.
Romanian personalities from academic, diplomatic, parliamentary and business community are greeting new D.P.R.Korea ambassador-H.E. Ri Kwang IL.