Economy of Romania – current issues and outlook

Economy of Romania – current issues and outlook
2019-05-20 KKI
On the 6th of May 2019 the Institute for Foreign Affairs and Trade had the pleasure of hosting, for the third time, Dr. Andrei Radulescu Director of Macroeconomic Research of the largest bank in Romania, Banca Transylvania. Mr. Radulescu held an open lecture in English titled “Economy of Romania – current issues and outlook” discussing a wide variety of topics ranging from the macroeconomic outlook of Romania, the effects of the global and European economic climate, to the economic relations of Romania with neighbouring countries.

Mr. Radulescu began by highlighting that the country is a champion of economic convergence in the region. Reflecting on the global and European economic climate Mr. Radulescu outlined that despite the rebounds of the first months of this year the global economy continues to show no signs of recession. However, we are heading towards the end of a cycle which will possibly result in an economic spillover and the Eurozone must be prepared to meet these challenges. Regarding the recent economic development in Romania, private consumption is showing a decreasing tendency despite the increase of wages in the country. Parallel with-it household savings are increasing as people are less certain of the future. While the government works on the implementation of more rigorous fiscal acts in the private sector, due to uncertainties investors are only willing to take up short-term risks. Romania remains less dependent on foreign financing due to the high savings in both private and public sector and can rely on significant amounts of remittances from Romanian citizens working abroad

According to Radulescu, economic policy tensions persist in Romania, that are coupled with a number of risk factors such as the global and European macro-financial climate, impact of capital flows directed at the emerging markets, the economic policy-mix and the non-optimistic attitude of households. Mr. Radulescu believes that these problems cannot be addressed without a stronger regional cooperation and increasing digitalization.