Romania is like a roller coaster, nearer to the top – descent is next, consultancy company says

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Romania’s economy, with growth based on consumption, looks like a sand castle which may be put down in a second, by a wave of by the breeze (of crisis). Higher inflation, the depreciation of the national currency and the financial blockage are the most important alarm signals from the businessmen questioned by the consultancy company Frames in the ‘Barometer on the state of economy’, July 2019 edition, informs.

Main issues:

  • Economy has grown by 5% but the pace will decrease in H2, say 72% of the businessmen, who anticipate GDP growth of 3.5-4%.
  • 22% of the interviewees see lower economic growth, only 6% anticipate growth above 4%.
  • The economic development based on consumption has brought money in the pockets, but has deepened the macro-economic imbalances. More and more investors see the current situation as similar to the period before the economic crisis, says Adrian Negrescu with Frames consultancy company.
  • “We are like a roller coaster, very close to the top – inevitable descent will follow,” Negrescu said.
  • The barometer reads that stimulation of consumption is beneficial up to some point, if it is accompanied by public policies able to stimulate horizontal economic development.
  • Economic development is supported by predictable fiscal framework, optimum transport infrastructure, investments, new jobs. Unfortunately these elements are missing.
  • Businessmen point to main challenges: 57% – fiscal blockage, 46% – increasing inflation, 38% – potential negative development of the exchange rate, 27% – higher taxes.
  • 54% of respondents believe the EUR/RON exchange rate will get closer to 4.8 units this year, 33% point to 4.7-4.75 units and 13% say the exchange rate will remain the same.
  • Asked about the most profitable fields this year, most managers pointed to trade (47%), IT (35%), agriculture (27%) and constructions (23%).

The half-yearly barometer on the state of economy was conducted by Frames during June 24-30, 2019, with online questionnaires, by phone and email, on a representative sample of 450 companies in various fields of activity, from trade to financial services, agriculture, energy, clothing, IT, etc.

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