MACROECONOMIC OUTLOOK FOR ROMANIA

 

In 2018, the banking sector had a positive development brought about mainly by a favourable macroeconomic framework which led to the acceleration of lending. In 2018, the GDP went up by 4.1% due to consumption-based demand. For 2019, the estimate for the GDP growth is over 4%. With a level of economic welfare which makes us rank penultimate in the European Union and rank last as regards fi nancial intermediation and financial inclusion, Romania has to step up in order to reduce these gaps which have become deeper and deeper in time. Just like financial education, digitalization or financial inclusion, financial intermediation is one of the coordinates where the banking sector, the financial environment in general and the political and institutional environments can set up partnerships, with a view to make a positive difference for the Romanians.

Romania has been making huge progress since we joined the European Union in 2007. In the 12 years elapsed under the EU umbrella, the nominal Gross Domestic Product advanced by 160%, to about €200 billion. GDP/capita expressed in the purchasing power standard (PPS) reached 64% of the EU average in 2018 in Romania, compared to 44% in 2007, according to Eurostat. In Romania, GDP/capita was €9,600 in 2017. With a speed that would provide sustainable funding, Romania can migrate to the group of EU countries where the GDP/capita tends to be €20,000 (the Czech Republic €18,100, Estonia €18,000, Portugal €18,900, Slovenia €20,800).

The inflation rate went up to 4.63% in 2018. At the end of 2018, the unemployment rate continued its downward trend reaching almost one of the historically lowest rates in our country, i.e. 3.3%. Nevertheless, the labour market in Romania is vulnerable before migration which reached a worrying level of 15% of the country’s population and 25% of the active population.

In 2018, the structural budget deficit and the trade deficit both went up. The fiscal stance was sustainable, contemplating the fact that the budget deficit was 3% of the GDP and the country’s public debt was 35% of the GDP. The acceleration of imports at a faster rate compared to exports led to a higher current account deficit i.e. 4.5% of the GDP. During 2018, the current account of the balance of payments posted a deficit of €9.4 billion, according to the National Bank of Romania’s data.

The map of the risks to financial stability in Romania drawn up by the National Bank of Romania indicates three high systemic risks: tension in internal macroeconomic balances, the risk of an uncertain and unpredictable legal framework relevant to financial and banking matters and the deterioration of investors’ trust in emerging economies. In an economy like that of Romania which relies on bank financing, it is important to foster a climate of trust.