Radio România Internațional

Tag: forecast

Inflation on the rise again

Postal services, fresh fruit or margarine were among the most expensive items in Romania in November this year, show data published by the National Institute of Statistics, according to which the annual inflation rate increased, again, compared to the previous month. More precisely, it reached 5.11% of the Gross Domestic Product, from 4.67% in October. It thus reached a level similar to that recorded in August, and also to that recorded in May. It shows the oscillating trajectory that the indicator followed in 2024, after it decreased from 6.61%, as it had been in December 2023. Romanians had to take more money out of their pockets, especially for fresh fruits, over 6.5% and also for electricity, approximately 3.4%. On the other hand, in November compared to October, air transport services recorded a decrease of over 8.2%, followed by thermal energy almost 5%.

Statistics for the last 12 months reveal price increases for postal services, with average increases of almost 18%, followed by fresh fruit with over 17% and margarine, with approximately 16%. Compared to November 2023, the prices of foods increased, on average, by 5%, and of services by 7.5%.

Financial analyst Adrian Codirlaşu, president of CFA Romania, an association that brings together investment professionals is here with details: ʺAs to the services component, if we look at all the monthly reports, we see that it remains consistently at high levels. We have had successive increases in the minimum wage. Most of the workers, paid with the minimum wage, are in this services component, and therefore, on the services side, we had an increase in cost, which is then reflected in prices, as is normal. Hence this slight increase in inflation. We also have a high budget deficit. The high budget deficit is inflationary. Why? Because the action of the Government, when issuing debt to finance it, is practically the equivalent of printing money, money that seeks to buy goods and services, so it increases demand and automatically prices.”

For 2025, analysts anticipate an inflation rate around 5%, with a higher value being possible at the beginning of the year. The National Bank of Romania has revised upward, to 4.9%, the inflation forecast for the end of 2024 and anticipates that it will reach 3.5% only at the end of next year. But nothing is certain! Fiscal policy and salary increase at the national level, as well as, externally, the evolution of the European economies, the dynamics of the oil price or the conflicts in Ukraine and the Middle East generate uncertainties. (LS)

12 December 2024
Downward forecast from the European Commission

Romania’s economic growth estimate has been recalculated by the European Commission (EC), at a value well below the initially established figure. In the forecast published in the spring of 2024, the estimate was that the economy would register an advance of 3.3% this year, followed by one of 3.1% in 2025. In a recent document, however, the EC states that the growth rate of the Romanian economy will slow down to 1.4% this year, then accelerate slightly to 2.5% in 2025. During this year, industrial production, constructions, IT and transports have slowed down due to the decrease in external demand from Romania’s main trading partners, the rapid increase in wages and the high energy prices. At the same time, retail sales have grown strongly as available incomes have grown at a rapid pace. However, the dynamic private consumption was largely counteracted by the negative contribution of exports to the GDP growth, while the growth of private investments was moderated by the uncertainty surrounding the expected fiscal consolidation measures, the EC stated.

On the other hand, according to the new forecasts, Romania’s budget deficit is forecast to reach 8% of the GDP in 2024 and to remain at a high level of 7.9% of the GDP in 2025. Comparatively, in the spring, Brussels estimated that the deficit was expected to reach 6.9% of the GDP in 2024 and 7% of the GDP in 2025. According to the EC, the deficit exceeding the expectations reflects a very rapid increase in government spending, mainly due to increases in public sector wages, to spending on goods and services, and social transfers, including pensions. It also reflects a slightly slower revenue growth due to weaker than expected economic activity. The good news is that inflation is expected to continue to decline in Romania, from an average of 10% in 2023, to around 5.5% in 2024. However, pressures on prices remain high, due to strong domestic demand, on the backdrop of increasing salaries and pensions, warns the EC.

Despite the economic slowdown, the demand for jobs remains strong, and the unemployment rate will be 5.5% in 2024 and 2025 and 5.4% in 2026. At the same time, public debt is expected to increase from 48.9% of the GDP in 2023 to almost 60% by 2026. The forecast does not include any impact of the government’s potential budget deficit reduction measures on revenues or expenditures, measures included in the medium-term fiscal and structural plan that Romania presented to the EC in October. These measures are not sufficiently specified by the government at this stage, the report points out. However, they have the potential to significantly reduce the public deficit in relation to this forecast, if they are designed and implemented properly in the budget for 2025. In its latest report, the IMF also revised downwards to 1.9% the estimates regarding the advance of the Romanian economy this year, from 2.8% as forecast in April. (LS)

18 November 2024
The IMF reviews Romania’s economic growth

The International Monetary Fund revised downwards the estimates regarding the growth of the Romanian economy this year, from 3.8%, as it estimated in October, to 2.8% – shows the latest report of the international financial institution, made public on Tuesday, in Washington. As regards the world economy, the International Monetary Fund announced that it would grow a little more than expected, by 3.2 percent, but warned the central banks against reducing the reference interest rates too quickly. According to the international financial institution, the escalation of the conflict in the Middle East risks leading to an increase in energy and food prices. Returning to Romania, the country will register this year, the IMF estimates, an average annual inflation rate of 6% and 4% in 2025. In October, the IMF estimated for Romania an average annual inflation increase of 5.8% in 2024. Recently, the National Bank decided to maintain the monetary policy interest rate at the level of 7%, the highest in Europe. The annual inflation rate will continue to drop in the coming months, the Central Bank claims, at a slower pace as compared to last year and on a slightly higher trajectory than anticipated.

According to the National Bank, the risks arising from the future conduct of the fiscal and revenue policy are amplified in the short term by the result of the budget execution in the first two months of the year, as well as by the wage dynamics in the public sector and the consequences of the new pension law. As for the current account deficit, the IMF expects it to remain at 7.1% of the GDP this year, similar to the level forecast in October and the level reported last year. For 2025, the international financial institution predicts a slight reduction of the indicator in Romania. Regarding the unemployment rate, the IMF estimates a level of 5.6% this year, similar to that of last year.

An IMF mission was in Bucharest in January to analyze the country’s economic and financial developments and to review macroeconomic forecasts. The Fund’s mission’s then consultations included numerous meetings with the Romanian authorities, and the discussions also approached the recalculation of pensions. At the end of the visit, Jan Kees Martijn, who led the mission, concluded that economic growth slowed in 2023, primarily due to weaker consumption. Core and headline inflation dipped into single digits in the second half of 2023, while the monetary policy interest rate was kept cautiously on hold. Although the current account deficit remains high, it has dropped to around 7% of the GDP due to slower domestic demand and low prices for imported goods. Currently, Bucharest does not have a financing agreement running with the IMF, but the international financial institution’s representatives periodically carry out missions in all member states. (LS)

17 April 2024
November 16, 2023

VISIT President Klaus Iohannis today concludes his 3-day visit to
Kenya, in an African tour that is taking him next to Tanzania. In Nairobi, the
Romanian official will visit an all-girls school to inaugurate a donation by
Romania under its development assistance programme. In fact, consolidating
Romania’s profile as a provider of education and training to African countries
is one of the goals of the African tour undertaken by president Iohannis. On
Wednesday, in Kenya, Mr. Iohannis had talks with his Kenyan counterpart William
Ruto, on which occasion four agreements were signed in the fields of environmental
protection and climate change, scientific cooperation, food safety and
diplomatic training. The tour, which also includes the Republic of Cabo Verde and
Senegal, is the first political and diplomatic initiative at this level in the
past 30 years, and aims to re-launch Romania’s relations with the countries on
the African continent.

PROTEST Around 2,000 people gathered this morning in
front of the government’s headquarters in Bucharest, in a national protest
against the public pension system and the recent law on tax-related measures. The
rally organised by the Meridian National Trade Union Confederation, brought
together representatives of various public sector staff, from local police to
civil servants or forestry and agriculture workers around the country. The main
source of discontent is the bill on public pensions, passed by the Cabinet on November
9, which according to trade unionists writes off some retirement rights currently
enjoyed by several personnel categories. On Wednesday employees of Romanian
public pensions agencies, healthcare agencies and employment agencies temporarily
suspended work and took to the streets. Healthcare Ministry staff and
pharmacists are also disgruntled and demand solutions from the government.

ECONOMY
Romania will conclude the year with a 2.2% economic growth rate, as against 4.6%
in 2022, the European Commission’s autumn forecast indicates. Growth estimates
have been lowered for the entire European bloc. In Romania, the causes include an
inflation rate above the EU average, low foreign demand and limited financing
options. The GDP growth rate is expected to reach 3.1% in 2024 and 3.4% in 2025,
which the 2023 public deficit is put at 6.3% of GDP, instead of the 5.7%
estimated by the Romanian government. Romania is already subject to an
excessive deficit procedure and it must narrow the gap between public spending
and revenues, so as not to lose EU funding.

CONFERENCE European and Asian media professionals are taking part in
the Media and Culture Days conference, organised by Radio Romania at the Carol
I Central University Library in Bucharest. The conference focuses on the key
role played by public mass media in promoting high-quality cultural content and
in supporting diversity and inclusion, with special emphasis on local and
regional communities. At the reception held on Wednesday night at Elisabeta
Palace, H.R.H. Prince Radu emphasised the historical ties between the Royal
Family and Radio Romania, two institutions in which Romanians still have
considerable confidence.

ISRAEL The UN Security Council has adopted a
resolution calling for humanitarian pauses in Gaza, AFP reports. The
resolution, drawn up by Malta and endorsed with 12 members voting in favour,
none against and three abstentions (Russia, United Kingdom, United States) also
calls for urgent and extended humanitarian corridors in Gaza for a
sufficient number of days to allow aid for the civilians there, as well as for
the immediate and unconditional release of all hostages held by Hamas and
other groups, especially children. Both Israel and the Palestinian side
criticised the resolution. The observer for Palestine, Riyad Mansour, said the
UN should have called for ceasefire instead of only pauses, while the Israeli
Ambassador Gilad Erdan condemned the resolution as meaningless. On site, Israeli
fighter jets hit the home of Hamas leader Ismail Haniyeh in Gaza, the Israeli
army announced today. Haniyeh’s house was used as terrorist infrastructure and
often served as a meeting point for Hamas’ senior leaders to direct terror
attacks against Israeli civilians and IDF (Israel Defence Forces)
soldiers, the Israeli military said. (AMP)

16 November 2023
September 27, 2023 UPDATE

EBRD The European Bank for Reconstruction
and Development has revised down its forecast on the development of the
Romanian economy in 2023 and 2024, according to a report made public on
Wednesday by this international financial institution. Thus, Romania’s GDP is
likely to grow only by 1.8% this year, from the 2.5% May forecast. Also,
the country’s economy is expected to see a 3.2% growth next year, as
compared to 3.5% estimated in May, the report also says.

COVID The COVID-19 cases are on the rise in
Romania with over 14,800 infections confirmed in the past week. The number of
cases is four times higher than a month ago. 41.3% of the new infections have
been registered in Bucharest, Timis, in the west of the country, Iasi in the
north-east, Prahova and Ilfov in the south. The number of hospitalized patients
is also on the rise. Out of the 1150 patients reported, 74 are presently in ICU.
27 people died last week after being infected with SARS-COV2. Almost all were
suffering from other diseases.

DEFENCE Romania’s Chief of Staff
has staged an online meeting with the representatives of the local public
authorities in south-eastern Romania in the context of the latest Russian
attacks on the Ukrainian bank of the Danube. According to a communiqué by the Ministry
of Defence, the conference focused on the optimization of the
inter-institutional coordination. High on the agenda were also a presentation
of the security situation, the army’s public communication, issues related to preparing
the population, economy and territory for defence, the legal responsibilities
of various institutions in the national defence system.

SCHENGEN Romania expects and deserves a
positive decision during the Spanish presidency of the EU Council regarding the
Schengen enlargement, the President of the European Parliament, Roberta
Metsola, said in Brussels. She was optimistic about the entry of Romania and
Bulgaria into the free movement area. The accession of the two countries was
blocked by Austria and the Netherlands, at the Justice and Home Affairs Council
last December, for alleged insufficient control of migrant flows. In the case
of Romania, Austria was the only country against the accession.

(bill)

27 September 2023
February 13, 2023 UPDATE

UN The Romanian foreign minister Bogdan
Aurescu will be a main speaker on Tuesday in New York at the open debate of the
UN Security Council on Threats to international peace and security:
Sea-level rise: implications for international peace and security. Participants
will discuss the risks posed by the rise in sea levels as a result of climate
change and will explore ways to tackle these risks as part of the global
security architecture. Romania’s presence in the UN Security Council
consolidates Bucharest’s efforts to promote a rule-based international order
and its role as an actor involved in the management of vital global problems,
the Foreign Ministry says.

MOLDOVA Moscow
plans to force a change of the political power in the R. of Moldova in
the forthcoming period, through violent actions
designed to destabilise the country, Moldova’s president Maia Sandu said. According
to her, Russia allegedly intends to use diversions, attacks on institutions and
hostage taking. The plan was uncovered with the help of intelligence received
from Kyiv, among others, Maia Sandu added. ‘The goal of these actions is to upset
constitutional order, to replace the legitimate power in Chişinău with an
illegitimate one, which will leave our country into the hands of Russia, to
stop the European accession process and to ensure that Moldova can be used by
Russia in the war against Ukraine,’ Maia Sandu said. Last Thursday in Brussels
the Ukrainian president Volodymyr Zelenskyy spoke to EU leaders about such a
plan put together by Russia.

NATO Romania’s defence minister, Angel Tîlvăr, is taking part on Tuesday
and Wednesday in Brussels in the meeting of the Ukraine Defence Contact Group
and a meeting of the NATO defence ministers. The Allied defence ministers
convene as part of the regular meeting schedule, and talks will primarily focus
on continuing support for Ukraine, on the implementation of the decisions taken
last July at the NATO Summit in Madrid and on preparing the decision package
for the forthcoming Summit in Vilnius. The meeting begins on Tuesday night with
an informal working meeting on security developments one year after the start of
Russia’s war of aggression in Ukraine. Invited to attend are also the defence
ministers of Sweden, Finland and Ukraine, and the EU High Representative for
Foreign Affairs and Security Policy.

VISIT The Minister-President of Bavaria, Markus Soder, who is on a
visit to Bucharest, Monday reiterated support for Romania’s Schengen accession,
emphasising that over the past few years the country made substantial progress
in fighting corruption and structural reforms. We support Romania on its path
towards Schengen accession. It is very important that we, in Europe, understand
that here in particular, given the situation with Ukraine and Russia, the
challenges are at an entirely different level, he added. Markus Soder also
voiced his appreciation for the support given by Romania to the Ukrainian
refugees. Markus Soder was received in Bucharest by president Klaus Iohannis and
PM Nicolae Ciuca. The 2 ministers signed a joint Statement on consolidating
bilateral relations, which also stipulates the resumption of the works of a
joint Romania – Bavaria governmental committee.

ECONOMY Romania’s economy is expected to grow by 2.5% in 2023 and by
3% in 2024, with the inflation rate standing at 9.7% this year and 5.5% next
year, according to the European Commission’s winter forecast made public on
Monday. According to the EC, the implementation of the National Recovery and
Resilience Programme should contribute to massive investments in Romania, driving
the economic growth this year.

WRD Monday was World Radio Day, established as such by UNESCO in 2011.
February 13 marks the first broadcast by the United Nations’ radio station,
back in 1946. The theme of World Radio Day this year was Radio and
Peace. On this occasion, Romanian artists showed their solidarity with
Ukraine. At 9:30 a.m. on Monday, all Radio Romania channels aired the famous
song Heal the World, released by Michael Jackson in the early 1990s. The
broadcast of this song on World Radio Day is part of a series of events organised
by Radio Romania to mark one year since the start of the war in the
neighbouring Ukraine. (AMP)

13 February 2023
The war in Ukraine and its most serious economic consequences at world level

The war in Ukraine this year will have its negative influence on economic growth worldwide, but also on inflation, with the process being extended next year as well, the Organisation for Economic Cooperation and Development has warned. In its most recent report on world economic prospects, the organisation did not rule out an aggravation of the situation, or the occurrence of other shocks capable of creating even more confusion as far as the present economic order is concerned.

OECD, which brings together 38 developed countries whose economy is expanding, worldwide, postponed its annual economic forecast report, usually published in March, because of Russia’s aggression on Ukraine which began on February 24, the reason behind the postponement being the uncertainty as regards the conflict’s evolution and economic aftermath.

OECD has predicted a 3 % economic growth at world level, as against the previous forecast, standing at 4.5 %. Next year, the economic growth is set to become even slower, standing at 2.8 % as compared to the initial 3.2 % forecast. Concurrently, inflation will definitely take its toll on economies and on the population’s purchase power, because worldwide, inflation is expected to stand at 8.5%, twice as much as compared to previous predictions. We’re witnessing the humanitarian crisis unfolding, a crisis leaving behind thousands of dead people, forcing millions of refugees to leave their homes and posing a serious threat to the economic recovery we have all been expecting after two years of pandemic, the report also shows. Russia and Ukraine’s major influence on world economy is provided by the two countries’ role as a supplier of raw material for several markets. All told, the two countries supply almost 30% of the export of wheat at world level, 15% of corn, 20% of fertilizers, minerals and natural gas, 11% of the export of oil. Then the supply chains at world level hugely depend on the Russian and Ukrainian export of rare metals and gas. The prices of all those raw materials have gone up after the war begun, all that with serious consequences on the economies of many countries. The sheer blocking of wheat exports could have as its aftermath a serious food crisis capable of causing real humanitarian catastrophes in some of the developing countries. Furthermore, the crisis of farm cultivations fertilizers will cause a poor farm yield, which will enhance the food crisis.

Hugely dependent on massive energy imports from Russia, the European Union will be the most affected by the consequences of the conflict at its borders. According to the OECD report, the Euro zone will have a 2.6 % growth this year, and of 1.6 % in 2023, as previously the OECD forecast pointed to a more than double economic growth.

A sudden prospective blocking of Russian gas deliveries to Europe, a constant growth of energy prices or the disturbance of supply chains could have devastating effects on European economies. The inflation skyrocketing could cause a sudden increase in interest rates to the central banks, posing an even more serious threat to the already feeble economic recovery, the report also shows.

(EN)

9 June 2022
Between stagflation and economic growth

Romania’s economic status is growing ever more disquieting,
amid pessimistic forecasts by the central bank and the European Commission’s
economic report, which estimates that central and eastern European countries
will have higher inflation rates this year than the rest of the EU. According to
Brussels, after a strong, 5.9% growth rate in 2021, Romania’s economy is likely
to slow down to 2.6% this year, as inflation erodes people’s incomes and Russia’s
aggression in Ukraine affects economies, supply chains and investments.

For next year, the European Commission expects economic
growth to pick up slightly, to 3.6%, following a possible drop in inflation. Unemployment
is predicted to stay at around 5.5 %, with prices likely to reach a peak this
year and gradually go down in 2023. Meanwhile, the public deficit will reach 7.5%
of GDP this year, possibly dropping to 6.3 % in 2023.

According to EU officials, this year’s inflation will
get to a record-high 8.9% in Romania, almost double the 4.1% rate in 2021, and
will slow down to 5.1% in 2023.

In turn, the National Bank confirms the rise in
inflation and does not expect it to go below 10% until the second half of next
year. Meanwhile, the National Statistics Institute confirms that in the first
quarter of this year the economic growth rate stood at over 5% compared to the
previous quarter and 6.5% compared to the first quarter of last year. Nonetheless,
the central bank adviser Lucian Croitoru believes that in the forthcoming
period Romania might be facing stagflation. This is more dangerous than extended
inflation, in that it also involves stagnant economic output.

Lucian Croitoru: The first half of the word comes from stagnation.
Which is not necessarily the same as recession, it might only be a slow, 1.5-2.5%
growth, which is not something we are used to in Romania. So I think this is
very possible. On the one hand, short-term inflation encourages production, even
stimulates a rise in budget revenues, but mind you, this is fuelled by
inflation and is not going to last. On the other hand, the war may entail lots
of challenges, it is unpredictable, we have no forecasts on how a conflict like
this may end, with so many factors involved. But, as Hemingway put it, inflation
and war are always solutions to policies lacking principles.

If the Romanian economy
enters the predicted stagflation period, prices and unemployment will rise,
expenditure will be low, life will be ever more expensive and economic
difficulties will deepen. (AMP)

18 May 2022
February 10, 2022 UPDATE

MILITARY President Klaus Iohannis and NATO’s secretary general Jens Stoltenberg
will visit the Mihail Kogălniceanu Air Base 57, the Romanian Presidency
announced. The 2 officials will also discuss with the troops deployed to the
military base and subsequently will have a joint press conference. Military
equipment for the US Task Force (TF) Cougar has already reached Romania. TF
Cougar will primarily consist of a
Stryker squadron relocated from Germany to Romania to protect the region in the
context of the Russia-Ukraine standoff. President Iohannis said
after a visit to the Headquarters Multinational Brigade South-East on Thursday
that the US and France deciding to strengthen their military presence in Romania
is a ‘firm sign of the coherence and consistency of Euro-Atlantic solidarity’ and
invited other Allied countries as well to consider contributing troops to the
multinational structures in Romania.

DRILLS Russia and Belarus Thursday began 10 days of military exercises near
the border with Ukraine and Poland. According to the Russian defence ministry, the drills are aimed at the tasks of repelling
external aggression while conducting a defensive operation, countering
terrorism and protecting common interests.
NATO is concerned that the Russian military build-up in Belarus is part of a
plan to attack Ukraine. Moscow denies plans to invade Ukraine, and says it will
pull out its troops from Belarus as soon as the drills are over. According to Radio
Romania’s correspondent in Moscow, Russia relocated troops and equipment from
as far as Siberia and the Far East, 10,000 km away, for the exercise in
Belarus.

GOVERNMENT The governments of Romania and the Republic of Moldova will hold their
first joint meeting in Chişinău on Friday, with the Romanian PM Nicolae Ciucă scheduled
to also have talks with president Maia Sandu and the Moldovan parliament
speaker Igor Grosu. A joint action and solidarity plan for the energy sector
will be put together within 6 months of signing a joint memorandum on energy
security, which is scheduled for Friday, the Romanian government spokesman Dan
Cărbunaru said. He added that a bill was passed on the mutual recognition of
diplomas. Over 12,000 students and 2,000 pupils from Moldova are currently
attending Romanian schools. The 2 governments are also to sign an agreement on
Friday concerning the building, maintenance, repair and use of a cross-border
bridge in Ungheni. Another agreement between the 2 states will concern roaming
and international call tariffs.

ECONOMY Romania’s economy went up by 6.3% in 2021, thanks to a
sound domestic demand, but the pace will slow down to 4.2% this year, to reach
4.5% in 2023, according to the winter economic forecast released by the
European Commission on Thursday. Last autumn the EC estimated Romania’s GDP
would grow by 7% in 2021, with rates of 5.1% and 5.2% forecast for 2022 and
2023 respectively. The most recent data concerning confidence in the economy
indicate positive, although moderated economic growth prospects, especially in services,
retail, constructions and industry. Private consumption is also expected to
recover in the second half of the year, when restrictions will be eased out and
inflation will slow down. Meanwhile, the EC substantially adjusted its 2022
inflation forecast for Romania, from 4% estimated in November to 5.3% this
winter, after a 4.1% inflation rate in 2021.

TENNIS The Romanian tennis player Irina Begu Thursday managed a
spectacular win against Petra Kvitova of the Czech Republic, 6-4, 6-0, which
secured her a place in the quarter-finals of the WTA 500 tournament in Sankt
Petersburg, Russia. Another Romanian, Jaqueline Cristian, lost to Aleksandra
Sasnovich of Belarus, 6-2, 6-3, and left the competition. (A.M.P.)

10 February 2022
January 12, 2022 UPDATE

COVID-19 Romania reported
8,600 new Covid cases and 44 related deaths on Wednesday. The incidence rate is
on the rise around the country, including the capital Bucharest, where it
passed 3 cases per 1,000 inhabitants, the city now being in the red tier. This
means that restaurants, cinemas, gyms and other venues can open at 30%
capacity. Also, schools where the vaccine uptake among staff is under 60% will
switch to online teaching. The National Public Health Institute confirmed the
sustained community transmission of the Omicron variant, saying almost half of
the cases did not have contact with someone infected. In the meantime,
preparations are being made for opening outpatient Covid evaluation centres
around the country.

CORRUPTION The Interior Ministry’s Anti-Corruption Directorate
Wednesday conducted 25 home searches in the counties of Neamţ and Iaşi (north-east),
as part of investigations concerning forgery and fraud offences involved in the
obtaining of COVID vaccination certificates. Physicians and nurses received
bribes in exchange for fictitious vaccination certificates. Late last year the Anti-Corruption
Directorate announced that since the start of the pandemic 168 criminal cases
were initiated with respect to fictitious vaccination and other offences. According
to the institution, Romania saw the largest-scale frauds in the EU in this
respect, with over 3,000 fake COVID certificates issued at Petea border
checkpoint. Some 1.8 million COVID-19 cases have been reported in Romania
since the start of the pandemic, and around 60,000 COVID patients died. Amid
anti-vaccine feelings fuelled by certain media outlets, politicians and opinion
leaders, Romania has the second-lowest vaccination rate in the EU.

EU FUNDING Over 1.9 billion euros will be transferred to Romanian
government accounts on Thursday, as part of the loans given to Romania under
the National Recovery and Resilience Plan, after the targets for Q4 2021 were
reached, the Ministry for EU Projects and Investments announced. The funds will
add to the 1.85 billion euros in grants paid by the European Commission on
December 2, 2021. Bucharest is to receive over 29 billion euros under the
National Recovery and Resilience Plan. The loans in the programme will be used
for the funding of large-scale projects, including motorways, water supply and
sewage networks, the digitisation of SMEs and reforestation, the Ministry
explained.

GROWTH The
National Institute of Statistics confirmed its 0.4% estimate with regard to the
growth of the Romanian economy in the third quarter of last year compared with
the previous quarter, but changes were made to the share of investments and
consumption in GDP growth. Also, in the third quarter, the net added value saw
important changes in the sectors of information and communications,
constructions, financial mediation and insurances and real estate transactions.

ECONOMY The Romanian economy is expected to grow by 4.3% this year,
as against a 4.5% growth rate forecast in June 2021, reads the World Bank’s report
on Global Economic Prospects, released on Wednesday. For 2023, the World Bank
forecasts a 3.8% GDP growth for Romania, while for last year the institution
estimates the country’s economic growth rate stood at 6.3%. The institution
expects the global economy to grow by 4.1% in 2022 and by 3.2% in 2023.

FOREIGN POLICY
Romania will continue to develop as an active, trusted, involved and
respected member of the EU and NATO. Romania’s approach is focused on
continuity, based on the three essential pillars of its foreign policy:
consolidating the country’s role and influence in the EU and NATO and
developing and deepening the strategic partnership with the US, said
president Klaus Iohannis at his annual meeting with foreign diplomats in
Bucharest. He also said strengthening the US military presence in Romania is a
major goal. Given the recent security challenges, it is obvious that we need
stronger action in terms of defence and deterrence, the Romanian president
added. Iohannis also said Romania is worried about the security situation in
Ukraine and its implications for Euro-Atlantic security and added that Romania
will continue to support the efforts of the Republic of Moldova to join the
European Union. (tr. A.M. Popescu)

12 January 2022
Economic forecast for Romania

The European Bank for
Reconstruction and Development (EBRD) has substantially improved its estimate
on Romania’s economic performance for this year, and in a recent report it expects
a 7.2% growth rate as opposed to the 6% estimated in June.

Further on, in 2022, the
European funds earmarked under the Recovery and Resilience Plan are expected to
lead to an increase in investments and improvement of exports, which jointly
with the predicted fiscal consolidation and the slow-down in private
consumption may translate into a GDP growth by over 4%.

However, EBRD cautions
that these forecasts are rather tentative. The main risk, as far as Romania is
concerned, is the pandemic, given that the country has the second-lowest
vaccination rate in the EU.

Other risk factors are
the high prices for natural gas and oil, because Romania, just like other
countries, is forced to offset the high electricity expenses for low-income
households. Other alarm signs are related to possible disruptions in supply
chains, and the depreciation of the national currency.

According to the
international financial institution, 3 south-eastern EU member states-Greece,
Romania and Bulgaria-are currently seeing a significant economic recovery,
after a rather difficult year 2020. In Romania’s case, domestic demand is the
main engine for growth.

On the other hand, the high prices for raw
materials may undermine the post-pandemic recovery of European economies, insofar
as they strongly affect the trade balance of energy-importing countries like
Romania.

According to the report,
the high energy prices may be a test of the public’s support for a greener
future. While global support was strong and growing in the past few years, in
some economies, including Egypt, Lithuania, Kazakhstan, Poland and Romania the
support rate is lower than in the late 1990s.

According to EBRD,
economies in the region will see an average growth rate of 5.5% in 2021, which
accounts for a 1.3% upgrade since the bank’s June forecasts. In 2022, as
economies recover, the rate will slow down to an average 3.8%. These forecasts
come with a high uncertainty element, given the risks entailed by the Covid-19
pandemic, by a possible worsening of international circumstances and a more
modest growth rate among the main trade partners.

The EBRD was set up in
1991 to invest in former communist states and assist them in the transition to a
free market economy. After the fall of the communist regime in 1989, EBRD became
a major investor in Romania, where it focuses on funding infrastructure, improving
productivity and consolidating the financial sector. So far the institution has
invested nearly 9 billion euros in the Romanian economy, three-quarters of
which went into the private sector. (tr. A.M. Popescu)

5 November 2021
Economic forecast for Romania

The European Bank for
Reconstruction and Development (EBRD) has substantially improved its estimate
on Romania’s economic performance for this year, and in a recent report it expects
a 7.2% growth rate as opposed to the 6% estimated in June.

Further on, in 2022, the
European funds earmarked under the Recovery and Resilience Plan are expected to
lead to an increase in investments and improvement of exports, which jointly
with the predicted fiscal consolidation and the slow-down in private
consumption may translate into a GDP growth by over 4%.

However, EBRD cautions
that these forecasts are rather tentative. The main risk, as far as Romania is
concerned, is the pandemic, given that the country has the second-lowest
vaccination rate in the EU.

Other risk factors are
the high prices for natural gas and oil, because Romania, just like other
countries, is forced to offset the high electricity expenses for low-income
households. Other alarm signs are related to possible disruptions in supply
chains, and the depreciation of the national currency.

According to the
international financial institution, 3 south-eastern EU member states-Greece,
Romania and Bulgaria-are currently seeing a significant economic recovery,
after a rather difficult year 2020. In Romania’s case, domestic demand is the
main engine for growth.

On the other hand, the high prices for raw
materials may undermine the post-pandemic recovery of European economies, insofar
as they strongly affect the trade balance of energy-importing countries like
Romania.

According to the report,
the high energy prices may be a test of the public’s support for a greener
future. While global support was strong and growing in the past few years, in
some economies, including Egypt, Lithuania, Kazakhstan, Poland and Romania the
support rate is lower than in the late 1990s.

According to EBRD,
economies in the region will see an average growth rate of 5.5% in 2021, which
accounts for a 1.3% upgrade since the bank’s June forecasts. In 2022, as
economies recover, the rate will slow down to an average 3.8%. These forecasts
come with a high uncertainty element, given the risks entailed by the Covid-19
pandemic, by a possible worsening of international circumstances and a more
modest growth rate among the main trade partners.

The EBRD was set up in
1991 to invest in former communist states and assist them in the transition to a
free market economy. After the fall of the communist regime in 1989, EBRD became
a major investor in Romania, where it focuses on funding infrastructure, improving
productivity and consolidating the financial sector. So far the institution has
invested nearly 9 billion euros in the Romanian economy, three-quarters of
which went into the private sector. (tr. A.M. Popescu)

5 November 2021
Economic forecast for Romania

The European Bank for
Reconstruction and Development (EBRD) has substantially improved its estimate
on Romania’s economic performance for this year, and in a recent report it expects
a 7.2% growth rate as opposed to the 6% estimated in June.

Further on, in 2022, the
European funds earmarked under the Recovery and Resilience Plan are expected to
lead to an increase in investments and improvement of exports, which jointly
with the predicted fiscal consolidation and the slow-down in private
consumption may translate into a GDP growth by over 4%.

However, EBRD cautions
that these forecasts are rather tentative. The main risk, as far as Romania is
concerned, is the pandemic, given that the country has the second-lowest
vaccination rate in the EU.

Other risk factors are
the high prices for natural gas and oil, because Romania, just like other
countries, is forced to offset the high electricity expenses for low-income
households. Other alarm signs are related to possible disruptions in supply
chains, and the depreciation of the national currency.

According to the
international financial institution, 3 south-eastern EU member states-Greece,
Romania and Bulgaria-are currently seeing a significant economic recovery,
after a rather difficult year 2020. In Romania’s case, domestic demand is the
main engine for growth.

On the other hand, the high prices for raw
materials may undermine the post-pandemic recovery of European economies, insofar
as they strongly affect the trade balance of energy-importing countries like
Romania.

According to the report,
the high energy prices may be a test of the public’s support for a greener
future. While global support was strong and growing in the past few years, in
some economies, including Egypt, Lithuania, Kazakhstan, Poland and Romania the
support rate is lower than in the late 1990s.

According to EBRD,
economies in the region will see an average growth rate of 5.5% in 2021, which
accounts for a 1.3% upgrade since the bank’s June forecasts. In 2022, as
economies recover, the rate will slow down to an average 3.8%. These forecasts
come with a high uncertainty element, given the risks entailed by the Covid-19
pandemic, by a possible worsening of international circumstances and a more
modest growth rate among the main trade partners.

The EBRD was set up in
1991 to invest in former communist states and assist them in the transition to a
free market economy. After the fall of the communist regime in 1989, EBRD became
a major investor in Romania, where it focuses on funding infrastructure, improving
productivity and consolidating the financial sector. So far the institution has
invested nearly 9 billion euros in the Romanian economy, three-quarters of
which went into the private sector. (tr. A.M. Popescu)

5 November 2021
July 28, 2021 UPDATE

HEAT WAVE Meteorologists have issued a code orange alert against extreme heat and thermal discomfort in seven counties in the south and the capital Bucharest, in place until Saturday. Maximum temperatures are expected to reach 40 degrees Centigrade locally. A code yellow alert against extreme heat is in place until Saturday for all other regions, with highs ranging from 34 to 39 degrees. Passenger and freight trains will travel at reduced speeds during this period. Road traffic authorities have also warned some
restrictions will be introduced due to the extreme heat, on Thursday, Friday
and Saturday, between noon and 8 pm in most of the country.

COVID-19 The number of COVID-19 infections in Romania remains low, although it has gone up in recent days. The authorities announced 159 new cases on Wednesday, one new COVID-related casualty and 47 patients in intensive care. According to the head of the vaccination campaign, medical doctor Valeriu Gheorghiţă, nearly 90% of the people currently diagnosed with COVID-19 are not vaccinated, while over 91% of related fatalities were people who hadn’t taken the anti-COVID jab. At present, some 30% of Romania’s total population is immunised. Starting August 2, young people aged 12-17 can also receive the Moderna vaccine, Valeriu Gheorghiţă said. The Romanian official went on to say that, by mid-September, Romania might start administering the third dose of the vaccine for at-risk categories, such as health workers, chronically ill and people over 65 years of age. So far, 4.8 million people have been fully vaccinated in Romania.

GOVERNMENT The Government Wednesday approved plans to further ease COVID-related restrictions starting August 1. PM Florin Cîţu mentioned, among others, that outdoors cultural and entertainment events may be attended by a maximum of 75,000 people, in places where the COVID-19 infection rate is under 2 per thousand, on condition that participants are vaccinated, recovered from the disease or have tested negative for it. For indoor and outdoor sports events, crowd attendance is limited to 75% of the venue’s full capacity, provided a physical distance of at least 1 m between viewers is ensured. In areas with an infection rate below 2 per thousand, bars, nightclubs, restaurants and gambling venues will also be open between 5 am and 2 am.

IMF The International Monetary Fund on Tuesday maintained its 6% economic growth estimate for the world economy this year and upgraded its outlook on the United States and other developed economies, while downgrading its forecast for a number of developing countries affected by the fallout of COVID-19. In the case of Romania, in October last year the IMF estimated a growth rate of 4.6% this year. The new outlook expects Romanias economic growth rate to reach 6% this year. Additionally, the IMF has upgraded its forecast for 2022, from 3.9% as originally estimated, to 4.8%. According to the new report, Romania’s economic growth rates for 2021 and 2022 will stand above the European average.

INFRINGEMENT The European Commission decided to start infringement procedures against 12 Member States, including Romania, for failure to transpose EU rules banning unfair trade practices in the agricultural and food supply chain. The deadline for transposing the regulations into national law was May 1, 2021. The Commission sent letters of formal notice to Austria, Belgium, Cyprus, the Czech Republic, Estonia, France, Italy, Poland, Portugal, Romania, Slovenia and Spain, requesting them to adopt and notify relevant measures. The Member States have now two months to reply.

BEAR CENSUS A bear census worth 11 million euro was launched on Wednesday in Romania. The Minister for Investments and European Projects Cristian Ghinea explained the project is funded under the Large Infrastructure Operational Programme. There will be two lines of investment, one focusing on the bear census itself, while the other will help implement state-of-the-art technologies aimed at limiting the interaction of bears with humans. Last week the Government had passed an order regulating human intervention in situations involving bears, under which bears can be driven away in low-risk cases, and tranquilized and relocated or even shot if they attack people or livestock.

OLYMPICS Romania won two medals in Wednesday’s rowing finals at the Tokyo Olympics: Ancuţa Bodnar and Simona Radiş won gold in the women’s double scull event, while Romania’s four crew, made up of Mihăiţă Ţigănescu, Mugurel Semciuc, Ştefan Berariu and Cosmin Pascari scooped the silver. Adding to the two medals is Ana-Maria Popescu’s silver medal in the women’s epee event. Romanian fighter Maria Claudia Nechita Wednesday failed to qualify into the 57 kg boxing semi-finals, after losing to Japans Sena Irie, 3-2. A victory would have secured her an Olympic medal. Also on Wednesday, Romanias under-23 football team drew with New Zealand, in its last Group B match, and failed to move forward into the quarter-finals. The Romanians came out 3rd in the group, after South Korea and New Zealand and ahead of Honduras.

FESTIVAL The 2021 edition of the largest cinema event in Romania, the Transylvania International Film Festival (TIFF) continues in Cluj-Napoca (north-west), until Sunday. Over 170 films are screened in this years festival. Concerts and meetings with film industry representatives are also organised as part of the event. TIFF aims to promote cinema by presenting some of the most important contemporary works which reflect the originality of their authors, less common forms of cinematic expression and new cultural trends. This years special guest in the festival is international star Sergei Polunin, regarded as the most talented ballet dancer of his generation. (tr. A.M. Popescu)

28 July 2021
Optimistic economic forecast

Romania will have the highest economic growth rate in the EU this year, according to the summer forecast of the European Commission, which predicted the Romanian economy will grow by 7.4% this year and by 4.9% next year.

The new forecast for 2021 is 2.3% higher than the spring estimates, because, according to the European institution, the Romanian economy performed strongly in the first quarter. The confidence of consumers and business people has also remained high so far. Private consumption is expected to stay sound, backed by the lifting of COVID restrictions, particularly in the fields hit severely by the pandemic, and by the increase in salaries in the first months of the year, the Commission said.

Moreover, investments will remain strong in 2021-2022, supported by both the private and public sectors. Exports are set to improve in line with the ongoing recovery in Romanias main trading partners but the contribution of net exports to growth is expected to remain negative over the forecast horizon, the Commission believes. Growth is projected to continue into 2022, although at a slower pace.

PM Florin Cîţu says these forecasts are the consequence of the private sector responding well to the measures implemented so far, and having confidence that all the reforms announced by the government will be implemented.

Meanwhile, professor Mircea Coşea, Ph.D., explains what these figures actually mean for Romania, in his opinion:

Mircea Coşea: “This 7% growth is actually not growth but recovery. In macroeconomic terms, there is a major difference between recovery and economic growth. What we are actually doing is recovering, that is, getting back to where we were. This is not necessarily to mean we will live better. Moreover, if we look at whats behind these figures, we will see things are rather disquieting. A recovery at this record-rate for the EU is not healthy. Compared to other countries around us, this extremely high figure means that in fact Romania does not rely on a proper economic foundation, but on loans.

At EU level, the economy is expected to grow by 4.8% this year and 4.5% in 2022, after economic activity above expectations in the first quarter and after the easing of COVID containment measures in the second quarter. (tr. A.M. Popescu)

8 July 2021