Radio România Internațional

Tag: GDP

  • Budget deficit reduction plan

    Budget deficit reduction plan

    By October 15, Romania should present the European Commission with a plan to reduce budget deficit, by October 15.

     

    Rating agencies, economists and analysts alike are signaling the excessive budget deficit, which could reach 8% of Romania’s GDP this year. European Union member states have to submit a deficit reduction plan to the Commission, by October 15 . Romania is among the countries that have not done so yet, but the Social-Liberal Government in Bucharest has promised to observe the deadline and present the 7-year plan to bring the deficit back within the limits accepted by the Union. The Romanian Minister of European Investments and Projects, Adrian Câciu: “This 7-year plan comes with a series of reforms which should not surprise anyone. They are included in the National Recovery and Resilience Plan. It is just an active calendar for those reforms to be conducted. From what I know and from what will happen – I hope it will happen, because I think we are a coalition of responsible people – by October 15 this plan will be submitted to the Coalition, approved and sent to the Commission. It is, after all, a general plan. It is the first assessment that we are sending, after which there will obviously be technical negotiations with the Commission, which may last until April 2025, when the Commission makes the last adjustment in the case of all member states. Romania is not the only country that is in an Excessive Deficit Procedure.”

     

    The most important fiscal-budgetary consolidation measures are those of reducing expenditure and, at the same time, further improving  collection to the state budget, following digitization,  Minister Câciu said. According to him, the reduction of unnecessary expenses in the area of ​​large public services must be continued, where the institutions need reform and quality increase. On the other hand, the digitization of the National Agency for Fiscal Administration (ANAF), must bring not only 0.5% of the GDP in recovered revenues , but  2% or 3% next year, Adrian Câciu said. Romania, the Minister explained, needs a 7-year deficit reduction plan, agreed on with the European Commission, given that it has very high investment-related expenses, which, in his opinion, nobody wants to postpone or cancel.

     

    The Bucharest Government has recently carried out the first budget revision this year, a positive one. It was based on a budget deficit of 6.9% of the GDP and a revised economic growth, from 3.4% previously estimated, to 2.8%. The Minister of Finance, Marcel Boloş, said on that occasion that additional funds had been allocated to the large investment projects, a leitmotif in the authorities’ speech. Boloş too, supported by his boss, Prime Minister Marcel Ciolacu, gave assurances that the deficit was sustainable.

  • The economy under pressure – the impact of inflation

    The economy under pressure – the impact of inflation


    Having been under an excessive deficit procedure for several years, since 2020, to be exact, Romania starts the year 2024 with the ambition of doing something to address the situation. A normal objective, but one which is going to be extremely ambitious, given that Bucharests efforts in recent years have not been able to solve the problem. The equation is all the more complicated now, in a year with four types of elections. There will be European Parliament, local, presidential and parliamentary elections, and Romania – the only country in the EU subject to excessive deficit procedure in 2023 – finished the past year with parameters far from Brusselss requirements. The figure reached is even higher than the targeted 4.4%, and we are talking about a budget deficit of around 6%.



    At the same time, the annual inflation rate, an indicator that has given Romania and other EU countries a hard time, reached 6.61% at the end of 2023, according to the latest data from the National Institute of Statistics. Overall, the entire macroeconomic picture of Romania is rather characterised by gaps between the calculations made by the government at the beginning and end of 2023 regarding inflation, deficit and budget revenues, analysts say. “2023 was a very complicated economic year for Romania. Inflation went down, in line with the developments in Europe, albeit more slowly. But the economy slowed down in the second part of the year and the real GDP growth will probably be around 2%, below the forecast value,” reads a Romania – the Euro Zone MONITOR report published in December, under the coordination of academician Daniel Daianu. How does the National Bank of Romania see the situation? Here is the spokesperson for the institution, Dan Suciu:



    Dan Suciu: “The year 2023 eventually ended in much better circumstances than I anticipated during it, especially at the beginning, but also along the way. At some point many feared that inflation will be even higher. We had doubts related to the economic growth in 2023, in the sense that the goal of the Central Bank was to reduce inflation, but not push the economy into recession, as it happened in many other countries, and at the same time to make sure that foreign currency reserves reach this historical record level, so that the financial and economic stability of the country, especially from the external perspective, should not be called into question at all. At the end of the day, we do have good results, and this creates the conditions for a reasonable 2024. I wouldnt say we expect miracles as of 2024, there are still many uncertainties. You know that we have a new tax package that came into force on January 1. This, despite the central banks efforts, will have a certain inflationary impact in the first quarter of this year, but we still cannot size it up properly. I mean, obviously it is important that it starts from an inflation rate of over 6% rather than 7% or 8%, so one the one hand it will not be very high, and we must trust that at least after this first quarter, the inflation will go down. This is one of the goals, to end the year with lower inflation, even if it will go up slightly in the first quarter.”



    The National Banks forex reserves that Dan Suciu mentioned had reached EUR 59.77 bln in late December 2023, compared to EUR 46.63 bln on December 31, 2022. This reserve is important, Dan Suciu explained:



    Dan Suciu: “This is money that the National Bank has from several sources, but all in all, depending on the amount of forex reserves, money may be issued and channelled into the economy, so that borrowing may stay at acceptable levels, so that payment obligations may be met, and so that the currency exchange rate may benefit from some stability. There are several roles that this reserve is able to play, including the fact that it helps keep interests for government loans at a lower level, and it enables the economy to run at a reasonable pace, without inflationary pressures.”



    All economic experts agree that the beginning of the year will see a rise in inflation, triggered by an excise increase and the scrapping of some tax facilities. The national currency may also depreciate slightly against the euro, says the financial analyst Adrian Codirlaşu, vice-president of CFA Romania:



    Adrian Codirlaşu: “In the coming year, I believe the depreciation of the leu against the euro will resume, at a slow pace, around 2-3% per year, as it has been lately, given that the inflation rate in Romania is higher than in the Euro zone, and given the high current account deficit that Romania has. There will be a rise in inflation in January, following the recent tax changes, with VAT increases, excise increases, the tax on turnover which is in fact another form of VAT. So there will be this inflation shock in January, of around 1-1.5%.”



    Later this year, in the context of the high budhet deficit, the tax policy will be the main risk for inflation, Adrian Codirlașu added. (L Simion, AM Popescu)


  • The Romanian economy at the start of 2024

    The Romanian economy at the start of 2024


    Last year the Romanian economy went up 1.8%, which is however 0.8% less than estimated, reads a recent World Bank report. Also, in January – November 2023, Romanian exports totalled nearly EUR 87 bln, and imports over EUR 112 bln. In other words, exports rose by 2% while imports dropped by over 3% compared to the corresponding period of last year, according to data made public by the National Statistics Institute.



    Even so, the trade deficit exceeded EUR 25 bln last year, in spite of getting more than EUR 5 bln smaller. The economic analyst Constantin Rudniţchi says the deficit primarily narrowed due to the drop in the prices of the energy imported by Romania and to a slow-down in consumption:



    Constantin Rudniţchi: “The good news, if any, is that the trade deficit for the first 11 months of last year dropped compared to the previous year. This decrease is owing to a slow-down in consumption, because, lets not forget, some of the trade balance deficit comes from consumer goods. Obviously, some other part of the deficit is due to industrial goods, but consumer goods have their contribution to the deficit. So on the one hand we saw a decrease in consumption, and implicitly in the deficit. And on the other hand, we have reason to hope (because we dont have all the data yet), the Romanian economy is beginning to produce more goods that are used domestically.”



    The analyst Constantin Rudnițchi believes that, for the trade deficit to keep its encouraging trend, public policies are needed which focus on major sectors, such as the foodstuffs, chemical products and the automotive industry.



    As for the future, the World Bank adjusted downwards its estimates on the Romanian economy, predicting a GDP growth by 3.3% and 3.8% in 2024 and 2025 respectively. In fact, according to the World Bank, the global economy will slow down for the 3rd consecutive year, to 2.4% – the slowest pace since the Covid-19 pandemic. For 2025, the global economic growth is expected to reach an encouraging 2.7%, but even in this case a downward adjustment was operated from the 3% estimate made public last June, especially because of the downturn experienced by the worlds most advanced economies.



    Under these circumstances, the goal of ending extreme poverty by 2030 seems impossible to reach, the World Bank concludes. One way to encourage economic growth, especially in emerging and developing countries, the institution says, is to step up investments in clean energy and adapting to climate change. (AMP)


  • January 2, 2024 UPDATE

    January 2, 2024 UPDATE

    QUAKE Romania stands
    by Japan in these difficult moments, the country’s president, Klaus Iohannis,
    said in a message which he conveyed on Tuesday along with condolences for the
    victims’ families. We recall that authorities in that country are in a
    battle against time in their attempt to find survivors after the 7.6 magnitude
    earthquake on Monday, which was followed by many aftershocks. According to
    provisional tolls, scores have been killed and hundreds of buildings destroyed.
    Numerous fires caused by broken pipelines have been reported in the north of
    the Noto peninsula, close to the quake’s epicenter. With sub-zero temperatures
    at night, rescuers are making great efforts to find survivors.






    WEATHER
    According to sources with the Environment Ministry, 2023 was the hottest year
    in the history of Romania’s weather forecasts. The average temperature stood at
    12.5 degrees centigrade, two degrees above the average of the period between
    1981 and 2010. At the same time, the 2012-2023 interval becomes the hottest
    period in the country’s history of weather forecasts. Last Christmas also
    proved to be the hottest since the beginning of weather monitoring in Romania
    with 21 degrees centigrade at Calafat, in the south. And according to
    Copernicus Climate Change Service, 2023 was also the hottest in Europe, where
    experts have again been cautioning against the ongoing global warming, as the
    greenhouse gas emissions are growing. According to Romania’s Environment
    Minister, Mircea Fechet, this means that the extreme weather phenomena will
    increase in frequency and intensity causing more damage and killing more
    people.




    PRICE HIKES The new year has brought a
    series of fiscal amendments to Romanians, ranging from new VAT rises to other
    majored excises and taxes. Fines have also been raised, and companies reporting
    over 50 million euros in turnover will be paying taxes of at least one percent
    of their turnover. Tobacco excises have been raised and so has the VAT, which
    stands between 9 and 19 % in certain products and services. A special tax has
    been introduced for expensive goods, such as houses or cars, and authorities
    have also raised excises for sweet products. Fuel excises are also getting
    higher while experts believe the new fiscal measures will translate into a
    higher inflation rate and a local currency that depreciates against the Euro.
    Romania’s budget deficit this year has been estimated at 5% of the GDP with an
    economic growth of 3.4%. 7% of the country’s GDP has been earmarked for
    investment.






    GAZA Israel has pulled out its
    tanks from some parts of the Gaza city announcing a new stage in its war
    against the terrorist group Hamas. The new change in Israel’s tactics involves
    the partial pull out of its troops from the Gaza Strip and an increased focus
    on smaller-scale targeted operations. Israel says one of the key objectives is
    the complete elimination of the Hamas threat and the release of the hostages
    still kept by the famous terrorist group. According to Radio Romania
    correspondent in Israel, the attempts to release the Israeli hostages, which
    seemed to be compromised at a certain point, have these days been given a fresh
    impetus thanks to the mediation efforts of Qatar and Egypt. The war in Gaza,
    which broke out after the attack on Israel masterminded and conducted by the
    terrorist group Hamas on October 7, when 12 hundred people were killed and 240
    kidnapped, has so far caused the death of roughly 22 thousand Palestinians in
    the Gaza Strip. At the same time, most of the region’s 2.3 million people
    residents has been displaced.




    (bill)

  • January 2, 2024

    January 2, 2024

    PRICE HIKES The new year has brought a
    series of fiscal amendments to the Romanians, ranging from new VAT rises to other
    majored excises and taxes. Fines have also been raised, and companies reporting
    over 50 million euros in turnover will pay taxes of at least one percent of
    their turnover. Tobacco excises have been raised and there are VAT raises
    between 9 and 19 % for certain products and services. A special tax has been
    introduced for expensive goods, such as houses and cars as well as raised
    excises for sweet products. Fuel excises have also been raised and experts
    believe the new fiscal measures will translate into a higher inflation and a depreciated
    local currency against the Euro. Romania’s budget deficit this year has been
    estimated at 5% of the GDP with an economic growth of 3.4%. 7% of the country’s
    GDP has been earmarked for investment.






    QUAKE Authorities in Japan are in
    a battle against time in their attempt to find survivors after the 7.6
    magnitude earthquake on Monday, which was followed by many aftershocks.
    According to provisional tolls, scores have been killed and hundreds of
    buildings destroyed. Numerous fires caused by broken pipelines have been
    reported in the north of the Noto peninsula, close to the quake’s epicenter. As
    temperatures went below zero at night, rescuers are making great efforts to
    find survivors.






    GAZA Israel has pulled out its
    tanks from some parts of the Gaza city announcing a new stage in its war
    against the terrorist group Hamas. The new change in Israel’s tactics involves
    the partial pull out of its troops from the Gaza Strip and an increased focus
    on smaller-scale targeted operations. Israel says one of the key objectives is
    the complete elimination of the Hamas threat and the release of the hostages
    still kept by the famous terrorist group. According to Radio Romania
    correspondent in Israel, the attempts to release the Israeli hostages, which seemed
    to be compromised at a certain point, have these days been given a fresh
    impetus thanks to the mediation efforts of Qatar and Egypt. The war in Gaza,
    which broke out after the attack on Israel masterminded and conducted by the
    terrorist group Hamas on October 7, when 12 hundred people were killed and 240
    kidnapped, has so far caused the death of roughly 22 thousand Palestinians in
    the Gaza Strip. At the same time, most of the region’s 2.3 million people
    residents has been displaced.






    WEATHER The
    weather remains warm in Romania with temperatures higher than those usually
    registered at this time of the year. Showers have been reported in small areas
    in the country’s south-east. Wind has intensified at higher altitudes in the
    mountainous area of the Eastern and Western Carpathians. The highs of the day
    are ranging between 4 and 12 degrees Celsius while the capital city Bucharest
    reports higher temperatures than usual for the winter season, of at least 10-11
    degrees Celsius.




    (bill)

  • The IMF economic forecast for Romania

    The IMF economic forecast for Romania


    The International Monetary Fund has published its latest economic forecast, according to which the world economy continues to recover from the pandemic, the Russian invasion of Ukraine and the energy crisis of 2022 but the medium-term prospects are mediocre. So, the IMF has forecast a 3% global growth next year, with the US outgrowing Europe. Data shows that Germany is the single G7 economy to see contraction this year. The IMF estimates a 2.2% growth rate for Romania this year from an initial forecast of 2.4% and a 3.8% growth rate next year.



    According to the same forecast, the average annual inflation rate in Romania is to be around 10.7% in 2023 and 5.8% in 2024. The IMF expects an unemployment rate of 5.6% similar to last year and of 5.4% for the next year.



    Also worth noting is that an IMF mission that has recently visited Romania has announced the deficit will reach 6% this year and go down to 5% next year. According to the IMF experts, the objective of the government in Bucharest in the following years must be a budget deficit of roughly 3% of the GDP. The head of the IMF mission for Romania, Jan Kees Martijn, believes the fiscal measures package the government wants to implement is not enough and that it will be difficult to implement in an election year like the next one. He said the aforementioned package is meant to curb the budget deficit but other programmes are needed to increase the effectiveness and incomes. The priorities of the Romanian government must be, the IMF experts say, an improved tax collection and the elimination of the fiscal exemptions. Jan Kees Martijn also believes that the taxes levied on banks have added an additional burden on enterprises, which could bear on their financial performances. “Fiscal policy also needs to be well planned and clearly communicated to provide predictability for households and firms. Increased predictability of spending on public sector wages and pensions is also important, and the planned reforms in these areas in the context of thee NRRP are vital. These steps would help improve medium-term budgeting” – the IMF expert went on to say.



    He also believes that investment in Romanias education and healthcare systems need to continue in order to achieve the EU standards. Privileges in the public system must be eliminated and the green transition supported. We recall that last month the European Bank for Reconstruction and Development revised its forecasts regarding Romanias economic growth. According to the EBRD forecasts Romanias GDP would register a 1.8% growth rate this year and a 3.2% next year.


    (bill)


  • Conclusions of the IMF mission in Romania

    Conclusions of the IMF mission in Romania


    The recently adopted fiscal package is a step in the right direction but further adjustment is need, the International Monetary Fund (IMF) delegation that assessed, until Wednesday, the state of the Romanian economy said in a press release. IMF experts have forecast a 2.3% economic growth for Romania this year and a budget deficit of 6% of the GDP and recommended the Romanian authorities to implement additional reforms accounting for 2% of the GDP. To this end, key measures to be considered are the elimination of remaining exemptions, privileges and loopholes, further VAT streamlining, implementing the reformed property tax and using tax policy to promote the efficient use of energy and, more broadly, foster the transition to a carbon-neutral economy.



    According to the international experts, the new tax package improves policy design in some areas. It broadens the tax base and improves revenues by limiting exemptions for workers in the agricultural, construction, food processing and IT sectors, and by limiting the number of goods subject to reduced VAT rates. The new fiscal package will improve public finances in 2024 and beyond by about 1 percent of GDP, resulting in a deficit of just above 5 percent of GDP, in 2024. However, fiscal deficits will need to fall below 3 percent of GDP, as agreed with the European Commission, to stabilize public debt over the medium term, help secure necessary market financing at lower interest rates, and support ongoing disbursement of EU funds. According to the IMF experts, increasing the predictability of expenditure with salaries and pensions is welcome, but the Governments decision to control the price of food products is not the right strategy to lower the prices.



    Moreover, the head of the IMF mission, Jan Kees Martijn, warned that it could be challenging to implement fiscal consolidation and the next steps under the National Recovery and Resilience Plan (NRRP) during a year with multiple elections such as 2024. He also said that additional taxes for banks put increase the burden on companies and could impact their financial results.



    Among the measures recommended by the IMF mission, is also improvement in administration and a good planning of fiscal policy, which should be communicated in a clear manner, so as to offer predictability to both companies and the population. Also needed is, according to the international experts, new investment and budget allocations to education and healthcare, to bring them to EU level.



    On their last day in Bucharest, the IMF experts met with the Romanian PM Marcel Ciolacu. He said the IMF recommendations, which are similar to those of the World Bank and the European Commission are already taken into account. At present, the Government focuses on reducing budget spending and fighting tax evasion and the bill for which it took responsibility in Parliament creates the general framework for the fiscal reform the Government wants to conduct. Marcel Ciolacu estimates that Romania will have one of the biggest economic growth rates in the EU this year and that the measures taken will help the country overcome the difficult situation experienced lately. (EE)




  • August 18, 2023

    August 18, 2023


    OLYMPIAD – Romania took 1st place at the Central European Olympiad in Informatics 2023 (CEOI 2023), held in Magdeburg, Germany. Student Luca Perju-Verzotti with the Tudor Vianu National College of Informatics in Bucharest took the first place and gold medals. Gold, silver and bronze medals were also won by three students with the Aurel Vlaicu Theoretical High School in Orăștie (central Romania) and the International Theoretical High School of Informatics in Bucharest.



    GDP — Romania is among the countries with the best results in terms of GDP growth and reduction of greenhouse gas emissions in the first quarter of this year, according to the Eurostat. Romanias GDP is 2.4% and has increased more than the European average of 1.2%. In terms of greenhouse gas emissions, Romania has reduced them by almost 5%, while the European average is 2.9%. The EU economy as a whole has become more efficient and less polluting. In the first quarter of 2023, EU economy’s greenhouse gas emissions totalled 941 million tonnes of CO2-equivalent, a 2.9% decrease compared with the same quarter of 2022. This decrease took place simultaneously with a 1.2% increase in the EU’s GDP in the first quarter of 2023, compared with the same quarter of 2022, Eurostat reports. Most emissions were released by the housing sector – 24%, followed by industrial production – 20%, electricity and gas sector – 19%, agriculture – 13% and transport and storage – 10%. The largest decrease in emissions occurred in the electricity and gas sector – 12.3% while the transport and storage sector had the largest increase – by 7.2%


    FOREIG AFFAIRS – The Romanian Minister of Foreign Affairs, Luminiţa Odobescu, spoke on the phone with her Armenian counterpart, Ararat Mirzoyan, and also with the Canadian Foreign Minister, Melanie Joly. According to a press release of the Romanian Foreign Ministry, during the discussion with the Armenian counterpart, Minister Luminiţa Odobescu reconfirmed Romanias support for the development of the relationship between the Armenia and the EU. Regarding the situation in the South Caucasus, the Romanian official welcomed the mediation efforts of the President of the European Council, Charles Michel, and voiced support for the peaceful resolution, through dialogue, of all pending issues, respecting the principles and norms of international law, including the provisions of international humanitarian law. On the other hand, during the telephone conversation with the Canadian counterpart, the very good cooperation on various files of bilateral interest was emphasized, such as cooperation in the energy sector, in the security and defense sectors and in the promotion of human rights. Also, the two ministers highlighted the joint commitment of Romania and Canada to provide sustained support to Ukraine and the Republic of Moldova, both in the context of efforts to combat the effects of Russias war in Ukraine, and in support of the European path of the two states.



    GOVERNMENT – The text of an emergency order that modifies the National Recovery and Resilience Plan, but also the proposals of the Ministry of Transport in terms of cutting red tape are on the agenda of todays meeting of the Romanian government. The government also wants to adopt and submit to parliament a draft law to revise the article of the Criminal Code, which refers to the punishment of discrimination and incitement to hatred.



    VISIT — The Ukrainian Prime Minister, Denîs Şmîhal, is in Bucharest today for talks with Romanian officials on aspects related to regional security, in the context of Russias military aggression against Ukraine. We will also discuss Romanias efforts regarding the transit of Ukrainian grain to ensure access to food worldwide, as well as issues related to the bilateral agenda for the protection of Romanian farmers and the rights of Romanian minorities in Ukraine, Romanian PM, Marcel Ciolacu said.


    FOOTBALL –Sepsi OSK Sfântu Gheorghe football squad, holder of the Romanian Cup, qualified to the Europa Conference League play-off after the 1-0 victory against FC Aktobe on Thursday evening, in Kazakhstan, in the second leg of the third preliminary round of the competition. In Sfantu Gheorghe, Sepsi had finished the match with Aktobe in a draw. On Thursday evening, the Romanian vice-champion FCSB was eliminated from the Europa Conference League by the vice-champion of Denmark, FC Nordsjaelland, who, after a goalless draw in Bucharest, won at home 2-0, in the second leg of the third preliminary round. Romanias champion, Farul Constanţa, has also qualified to the Europa Conference League play-off, which won the away match with Flora Tallinn of Estonia. Two Nordic teams will be the opponents of the Romanians in the play-off: HJK Helsinki (Finland), for Farul and FK Bodoe/Glimt (Norway) for Sepsi. (EE)


  • June 8, 2023 UPDATE

    June 8, 2023 UPDATE

    STRIKE Trade unions in Romania’s education system have
    planned another protest rally on Friday amid dissatisfaction with the
    government’s response to their claims. In the meantime, the Executive on
    Thursday endorsed a memorandum regarding the pay rises granted to the personnel
    in the country’s education system under the new pay law. In this way the
    Executive is guaranteeing this domain will be a top priority. Romania’s Liberal
    Prime Minister, Nicolae Ciuca has given assurances the salary of a beginner
    teacher will be based on the average medium salary, as the protesters requested.
    The memorandum also refers to a holiday bonus according to the teachers’ salaries,
    as well as to other bonuses. In another development, field minister Ligia Deca
    has announced that applications for the Baccalaureate and the national
    assessment exams for 8th graders will be extended until June 13 and
    the competency tests from the Baccalaureate exam will take place over 14 – 23 June.








    FUND The EU Modernization Fund made
    available 2.4 billion Euros for 31 projects in seven beneficiary countries,
    including Romania, in order to help them streamline their energy systems, cut
    greenhouse gas emissions in energy, industry and transport as well as to
    improve energy efficiency, the European Commission announced on Thursday. This has
    been the highest sum made available so far and will give an impetus to Europe’s
    ecological transition According to the European Commission, these investments
    are helping the member states to reduce their dependency on fossil fuel from
    Russia, meet their climate and energy objectives for 2030 and contribute to the
    EU’s long-term commitment to achieving climate neutrality by 2050. Additional
    investment has been made in Romania, 1.1 billion euros, the Czech Republic 1
    billion euros as well as in countries like Bulgaria, Poland, Croatia, Latvia
    and Lithuania. The sums made available on Thursday, have brought the total
    payment from the aforementioned fund to roughly 7.5 billion euros, benefitting
    10 eligible member countries.










    GROWTH Romania reported an economic growth
    rate of 2.3% in the first quarter of this year, compared to the similar period
    of 2022, according to provisional data published today by the National
    Institute of Statistics. Thus, the estimated Gross Domestic Product was over
    312 billion lei (about 62 billion Euros). Among others, wholesale and retail
    trade, motor vehicle and motorcycle repair, transport and storage, as well as
    constructions contributed to the increase in the GDP. The World Bank estimates
    that Romania’s Gross Domestic Product will register, this year, a growth of
    2.6%. The IMF has revised significantly downward the estimates regarding the
    growth of the Romanian economy in 2023, from 3.1 to 2.4%.






    DEFENCE The Commander of the U.S. European
    Command, General Christopher G. Cavoli, and the Romanian Chief of Defense
    Staff, General Daniel Petrescu, are the hosts of the Central European Chiefs of
    Defense Conference, on Thursday and Friday, in Bucharest. The chiefs of defense
    from Bulgaria, the Czech Republic, Croatia, Poland, Slovakia, Slovenia and
    Hungary are participating in the meeting. Nine military leaders of the US
    National Guard are also present, the Romanian Defense Ministry reports. The
    event includes topics on security challenges and aims to intensify military
    cooperation relations to ensure stability in the region.


    (bill&LS)

  • Spring economic forecasts

    Spring economic forecasts


    The COVID-19 pandemic, skyrocketing energy prices, steep inflation and the consequences of the war started by Russia in neighbouring Ukraine were as many blows to the economy of the EU countries.



    And still, they seem to have absorbed these successive shocks and to get back to a positive trend. The European Commission has announced that the blocs economy performed better than expected, with a one per cent growth of GDP in the first 3 months of the year.



    Of the 27 member states, Romania is expected to see a 4% economic growth this year, one of the best in the EU. Positive factors include a drop in energy prices back to the level reported 2 years ago, a resilient labour market, a rise in consumption and investments.



    The EU economy, experts say, has managed to contain the negative impact of Russias war of aggression against Ukraine, and coped with the energy crunch by quickly diversifying supply sources and by reducing considerably its natural gas consumption.



    The significant drop in energy prices has ripple effects across the economy, leading to falls in production costs. In turn, consumers get lower energy bills, although private consumption is expected to stay low as long as salary increases remain below the inflation rate.



    However, the inflation rate dropped in the first quarter of 2023 and it may reach 7.3% in April and 5.8% towards the end of the year, says Radio Romanias correspondent in Brussels, who looked at the European Commissions spring economic forecasts.



    The EU Commissioner for Economic and Financial Affairs, Paolo Gentiloni, acknowledges negative aspects, such as the rise in interest rates and tighter conditions for loans, but says that, rather than a weakness of the banking system, this is an adjustment to post-crisis signals.



    Another major element for the European economy is the implementation of post-Covid national recovery and resilience plans, which are basically capital injections, with an average absorption rate of 3% of GDP. According to the EU Commissioner, by 2024, recovery and resilience plans will have amounted to 3.5% of Spains and Greeces gross domestic product, nearly 3% in Croatia and Portugal, 2.5% in Slovakia and Italy, 2% in Romania and Bulgaria, 1.5% in Poland and Hungary and 1% in France and Slovenia.



    The Unions labour market is expected to have a moderate response to the slower economic growth rate. Employment is predicted to go up 0.5% this year and 0.4% in 2024, with the unemployment rate estimated to stay at little over 6%. (AMP)


  • January 27, 2023

    January 27, 2023

    ECONOMY
    Romania reports a record-high GDP increase for last year, from EUR 240 bln in 2021 to nearly
    EUR 290 bln, according to the National Strategy and
    Forecast Commission. For this year, however, the institution estimates a
    slow-down of the economic growth from 4.9% in 2022 to 2.8%. The inflation rate
    is also expected to drop significantly by the end of this year, from 16.4% in
    2022 to 8%, and consumption growth is also predicted to drop to 2.4%, compared
    to 4.6% last year. The figures in the winter forecast, made public on Thursday,
    are not different from the ones in the autumn report, released in October.


    HEALTHCARE The number of respiratory infections in Romania dropped last
    week by almost one-quarter compared to the previous week, to 103,000 cases, the
    National Public Health Institute announced. The number is nonetheless 21%
    higher than the average weekly rate in 2015-2020. According to statistics,
    nearly 5,000 of them were flu cases. Since the start of the cold season, 36
    people died from the flu, and nearly 1.5 million people got anti-flu vaccines.


    DIPLOMACY The Romanian
    foreign minister Bogdan Aurescu had a bilateral meeting in Sibiu today with his
    Dutch counterpart, Wopke Bastiaan Hoekstra. The talks focused on Romania’s
    Schengen accession and the ongoing efforts to further this important goal. Bogdan Aurescu reiterated that Romania’s accession will help strengthen
    the security of the EU as a whole and will give credibility to the Union. In
    turn, ministrer Hoekstra reiterated the Netherlands’ active support for this
    process. Wopke Hoekstra also reconfirmed the Netherlands’ commitment to
    consolidating NATO’s deterrence and defence posture on the
    eastern flank, in the context of Russia’s aggression in Ukraine, by
    contributing troops to the NATO Battle Group in Romania. The 2 officials also
    discussed the Romanian-Dutch bilateral relations. The meeting took place in the
    context of the Dutch official’s visit to Romania for trilateral political
    consultations in Bucharest, together with the French diplomacy chief Catherine
    Colonna. Ahead of the talks, the 3 ministers made a joint visit to the French
    and Dutch troops stationed at the Cincu military base as part of the NATO Battle
    Group in Romania. In
    Bucharest, Catherine Colonna will be received by president Klaus Iohannis and
    PM Nicolae Ciucă.


    COMMEMORATION
    The International Holocaust Remembrance Day, or the International Day in Memory
    of the Victims of the Holocaust, is marked every year on January 27, under a
    resolution endorsed by the United Nations in 2005. In 1945, on January 27, Allied forces liberated
    the largest Nazi extermination camp, in Auschwitz-Birkenau, Poland. According
    to historians, the Holocaust resulted in the killing of 6 million Jewish people
    in Europe and millions of other ethnics by Germany’s Nazi regime. Events and activities are organised on
    this day every year at the UN headquarters in New York and UN offices around the world.
    This year’s theme is Home and Belonging. In 2022, the UN General Assembly
    adopted a resolution tabled by Israel, calling on all countries to condemn Holocaust
    denial and anti-Semitism, especially on social networks.


    TENNIS Gabriela Ruse (Romania) / Marta
    Kostiuk (Ukraine) today lost to the defending champions, Barbora Krejcikova and
    Katerina Siniakova (Czech Republic) 6-2, 6-2, in the doubles semi-finals of the
    Australian Open. This is the best performance for Ruse and Kostiuk in a Grand Slam
    event. Krejcikova and Siniakova hold a combined 6 Grand Slam doubles titles, 3
    of them last year alone, when they only missed the Roland Garros. In the final,
    the Czech players take on Shuko Aoyama/Ena Shibahara, of Japan, at their first
    presence in a Grand Slam final after defeating Coco Gauff/Jessica Pegula (US). (AMP)

  • January 26, 2023 UPDATE

    January 26, 2023 UPDATE

    Growth. Romanian Prime Minister Nicolae Ciucă has announced that,
    according to data from the National Commission for Strategy and Prognosis, the
    Gross Domestic Product in 2022 increased by 49 billion euros compared to 2021.
    He added that, regarding the economy, the forecast for 2022 is also favorable,
    with an increase of 2.8%. The Prime Minister has also appreciated the role that foreign investments played
    in the Romanian economy last year and the effective absorption of European
    funds. Nicolae Ciucă highlighted the importance of dialogue with the
    entrepreneurial environment in the country and supporting Romanian capital. The
    Prime Minister has announced that farmers will have more than 100 million euros
    available under the state aid scheme for reducing the excise duty on diesel
    fuel used in agriculture. In turn, the
    Minister of Finance, Adrian Câciu, has stated that Romania has changed the type
    of economic engine, moving from a ‘slow’ one from the period of the COVID-19
    pandemic, to a sustainable one, based on economic incentives.














    Aid. This year, the state will
    grant aid worth 1,400 lei for the payment of energy, heat, gas or wood bills to
    certain vulnerable categories in Romania: pensioners, people with disabilities
    who have low incomes, beneficiaries of social aid and families receiving
    support allowance. There is only one condition: the net income of a family
    member should not exceed 2,000 lei (approx. 410 Euros). This aid will be
    granted as of February, by means of energy cards, which will be printed and
    distributed through the Romanian Post, based on lists submitted by the Ministry
    of Labor and Social Solidarity. According to the authorities, there are
    approximately four million beneficiaries of these cards.








    Kyiv. Ukrainian authorities have announced the intention to
    open new crossing points on the border with Romania, in the Chernivtsi region,
    to facilitate the transport of goods and the movement of people, after the latest
    traffic jams. According to the Ukrainian authorities, in addition to the
    Dyakivtsi-Rackovets crossing point, which will be put into use in the coming
    period, two more new customs points are being prepared: the one between Sepit
    and Izvoarele Sucevei and another between Rusca and Ulma. They have not been
    operating since 2010. The traffic through the Siret border crossing, which had
    recorded unprecedented values, is much smoother than at the end of last year,
    when there were queues of over 40 kilometers on the Ukrainian side, but there
    are still problems due to power cuts
    caused by the situation in neighboring Ukraine.


















    Military. Less than 20 kilometers from the border with Ukraine, the
    Leclerc tanks, the main means of attack of the French battle group deployed in
    Romania, have arrived at the Smârdan shooting ground in Galati (south-east).
    The place is hosting an extensive training exercise, for which approximately
    600 French soldiers have been mobilized, with 200 combat vehicles. The
    Smârdan exercise is the largest currently carried out by NATO on the eastern
    border of the EU. On Friday, the Romanian Minister of Foreign Affairs, Bogdan
    Aurescu, and his counterparts from France and the Netherlands, Catherine
    Colonna and Wopke Hoekstra respectively, will visit the Getica National
    Training Center in Cincu (center). According to the MFA, the program of the
    ministers’ visit will include interactions with military personnel, especially
    French and Dutch, and visits to several military facilities jointly used by the
    allied troops deployed in Romania.






    Ukraine. Now that the United States and Germany have pledged to send
    advanced tanks to Ukraine, their rapid delivery in sufficient numbers is vital
    for defense against Russia, President Volodymyr Zelensky said, thanking the allies for their decision. The United
    States and Germany announced on Wednesday that they would send Abrams and
    Leopard 2 tanks to Ukraine. The decision, long awaited in Kyiv, would help the
    Ukrainian army in a potential spring counteroffensive against the Russian
    forces in the occupied territories. Moscow said that sending tanks to Ukraine would
    be a dangerous provocation.






    Infections. In Romania, last week the number of cases
    of respiratory infections decreased to a quarter the number recorded the
    previous week, down to 103 thousand. This number is, however, 21% higher than
    the weekly average between 2015 and 2020. The National Institute of Public
    Health announced that over 4,500 cases of influenza were registered, most of
    them in Bucharest. Since the start of the winter season, 36 people have died
    from the flu, and nearly 1.5 million have gotten flu shots. Some hospitals are
    still overcrowded, even though the number of cases has decreased. (MI)

  • January 3, 2023 UPDATE

    January 3, 2023 UPDATE

    IMF The IMF expects 2023 to be tougher than
    2022 for most of the global economy. The main economic growth engines, namely
    the United States, the European Union and China will see their economic
    activity slow down, so that 2023 will be difficult for the global GDP, the head
    of the International Monetary Fund (IMF), Kristalina Georgieva, told the
    American TV station CBS. In October, the
    IMF downgraded its global economic outlook for 2023, following the war in
    Ukraine, sharply rising interest rates and inflationist pressure. Georgieva
    said that China, which sees a surge in COVID-19 cases following the dismantling
    of its strict zero-COVID policy, may have its economy affected. Meanwhile,
    the EU has been especially hard hit by the war in Ukraine, with half of the
    bloc expected to be in recession this year, Georgieva said. Also, the global
    growth rate will slow down from 3.2% in 2022 to 2.75 this year, while
    governments will have to make sure they have sufficient revenues for
    expenditure, as they will no longer be able to borrow money in advantageous
    conditions. As regards Romania, the economic growth rate will slow down to 2.8% this year, from more than 5% in 2022.


    NATO NATO allies will discuss, in the
    upcoming months, about the share earmarked for defence, given that some of them
    have requested that the current 2% share of national output to be the minimum
    target spent on defence, NATO Secretary General Jens Stoltenberg told the
    German news agency DPA. The chief of the Alliance also said he would chair a
    number of meetings on this topic, and that his goal was to reach an agreement
    ahead of the next summit in Vilnius in July 2023.




    SURVEY 2023 starts on a pessimistic note for
    most Romanians, according to a survey conducted by the Romanian Institute for
    Evaluation and Strategy. More than half of the participants in the poll believe
    2023 will be worse for Romania than the year before. Active people aged 36 to
    65 are the most pessimistic, while the less educated respondents are more optimistic
    in this respect. In terms of living standards, half of respondents have little
    expectations from the year that has just started. People aged over 51, with
    monthly revenues below 400 euros, have the darkest view of the future. Unlike
    them, those with incomes above 800 euros a month say 2023 will be the same as
    2022. However, the most optimistic in terms of financial future are young
    people aged below 35. As for the changes they would like to see in their
    country, most respondents indicated the politicians, the political class or the
    country leaders, followed by the Government and the ruling parties.


    CORRUPTION The European Parliament has
    launched an urgent procedure to wave the immunity of two members of the
    European Parliament – Italian Andrea Cozzolino and Belgian Marc Tarabella,
    following a request from the Belgian judicial authorities. A number of current
    and former European officials or employees are investigated in this case. The
    scandal began in December, with the arrest of the Greek MEP Eva Kaili, who is
    accused of accepting large sums of money to peddle influence for Qatar and
    Morocco at the European Parliament.


    FOOTBALL FIFA will ask every country in the
    world to name a stadium in honour of Pelé, said FIFA president Gianni Infantino,
    attending the funeral in Santos, Brazil. Edson Arantes do Nascimento by his
    real name, Pelé, the only footballer who won three world titles, died aged 82.
    Throughout his career he scored almost 1,300 goals. He was designated
    footballer of the 20th century by the International Olympic Committee in 1999,
    Player of the Century by FIFA in 2000 and won the Golden Ball. (EE, AMP)

  • Slight decrease in the budget deficit

    Slight decrease in the budget deficit

    Romania’s general consolidated budget deficit was 4.2% of the GDP in the first 11 months of this year, compared to approximately 3.4% at the end of October. As compared to the similar period of 2021, when it stood at 4.7% of the GDP, the budget deficit decreased by 0.5% in the January-November period, the Finance Ministry officials say. Figures show that the deficit was 58.70 billion lei, i.e. almost 12 billion Euros. The deficit target for the current year is 5.8% of the GDP. The evolution of revenues, the Finance Ministry shows, was mainly influenced by the growth of non-tax revenues, revenues from VAT, of insurance contributions, of additional receipts from energy and European funds.



    The expenses of the general consolidated budget amounted to approximately 475 billion lei, increasing by more than 19% as compared to the same period of the previous year. Expressed as a percentage of the Gross Domestic Product, expenses for the 11 months of 2022 registered an increase by 0.5% compared to the same period of 2021, reaching 34% of the GDP. Personnel expenses dominate the expenses chapter, which exceeded 100 billion lei.



    On the other hand, inflation and the uncertainties generated by the armed conflict in Ukraine led to an increase in interest payments related to the public debt portfolio. Social assistance expenses also increased, by around 18%, an evolution influenced mainly by the increase, from January 1, 2022, of the pension point by 10% and of the minimum pension, as well as by the granting of financial aid for the pensioners of the public pension system that had pensions smaller than or equal to 1,600 lei. Expenditures on projects financed from non-reimbursable external funds, including subsidies from the European Union related to agriculture, were 31% higher compared to the 11 months of the previous year.



    Expenditures for investments, which include capital expenditures, as well as those related to development programs financed from internal and external sources, exceeded 56 billion lei, up by 27% compared to the same period of the previous year. For next year, Romania has a budget based on a 2.8% economic growth rate and a deficit of 4.4% of the gross domestic product. The budget construction is not based on new taxes and is structured on an inflation rate of 9.6%. Money for the protection of the vulnerable categories was also included. Pensioners’ incomes will increase at the beginning of the year due to the increase in the pension point by 12.5% ​​and the granting of various types of support. (LS)

  • August 17, 2022

    August 17, 2022

    Measures. Leaders of the governing coalition in Romania are discussing new measures aimed at protecting the population and the economy against the big increases in electricity, fuel and natural gas prices. The measures envisaged include the reduction of the number of intermediaries between producers and consumers, and thus prevent prices from rising. The Social Democratic Party would also like a regulation of the energy market for domestic consumers and SMSEs, but the proposal has been rejected by the National Liberal Party. According to the Social Democratic leader Marcel Ciolacu, decisions regarding energy must be adopted by the Government by September 1st and applied for a longer period, until 2025.



    GDP. The Gross Domestic Product of the European Union and the Eurozone registered an increase of 0.6% in the second quarter of 2022, compared to the previous three months, according to preliminary data published on Wednesday by the European Statistics Office (Eurostat). In the first quarter of 2022, compared to the previous three months, the Gross Domestic Product registered an increase of 0.5% in the euro zone and 0.6% in the EU. Among the EU member states for which data are available, the most significant growth rates in the second quarter of 2022, compared to the previous three months, were recorded in the Netherlands (2.6%), Romania (2.1%) and Sweden (1.4%). Compared to the second quarter of last year, the GDP increased by 3.9% in the euro zone and by 4% in the European Union between April and June 2022, with all EU member states for which data are available reporting increases. Romania registered an annual growth of 5.3% in the second quarter of 2022, after an annual growth rate of 6.4% in the first three months. The National Institute of Statistics announced that Romanias economy grew by 2.1% in the second quarter of the year, compared to the previous quarter, while compared to the similar period in 2021, the growth was 5.3%.



    Entrepreneurship. The “Women Entrepreneur” program will be launched in Romania on Thursday, with the aim of encouraging and stimulating small and medium-sized enterprises founded and managed by women. According to the authorities, just over 35% of the Romanian entrepreneurs are women, and approximately 785 companies will benefit from this program this year. The maximum budget allocated to the program in 2022 is of about 31 million euros, each company being able to benefit from about 40 thousand euros. The “Women Entrepreneur” program also contributes to achieving one of the OECD standards – gender equality in the entrepreneurial field.



    Protest. Trade unionists from the Romanian police and penitentiaries are protesting, today, by picketing the Government headquarters, which will be followed by a march towards the offices of the Social Democratic and National Liberal parties, which are partners in the governing coalition. On Tuesday, the trade unionists picketed the headquarters of the Ministries of Interior and Labor. They announced that, on Thursday, the protests will continue at the headquarters of the European Commission Representation in Romania. The trade unionists are unhappy with salaries and the criteria used to award bonuses. They also demand the updating of the value of meal tickets according to the consumer price indices established by the National Institute of Statistics.



    Swimming. The Romanian swimmer David Popovici has qualified for the 400 m freestyle final of the European Championships in Rome. He raced in the first of five qualifying rounds. 38 swimmers participated in the rounds, and the first eight qualified for the finals. “It will be the strangest race for me, because I have no experience in this kind of event. Ive only done it three times, in small competitions. But its a good place to start and see if Im good or not”, said David Popovici before the race. At only 17 years old, David Popovici is, as of Saturday, the world record holder in the 100 m freestyle with 46 seconds and 86 hundredths. On Monday he also won the gold medal in the 200 m freestyle. A world champion in both the 100 and 200 m freestyle, the Romanian swimmer covered the four lengths of the pool in 1 minute 42 seconds and 97 hundredths, a new world and European record.



    Tennis. The Romanian tennis player Simona Halep, who has just won the WTA 1000 tournament in Toronto, has defeated the Russia Anastasia Potapova, 6-4, 6-3 and has qualified for the second round of the tournament tin Cincinnati, with 2.5 million dollars in prize money. In the next round Simona Halep will play against another representative of Russia, Veronika Kudermetova. Romanian player Sorana Cirstea has also qualified for the second round, after defeating the Swiss Belinda Bencic, the defending Olympic champion. Next she will take on the Czech Petra Kvitova. (MI)