Juncker plan could increase Romania’s GDP by 0.95 pp per year in the worst case, survey says

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The Juncker plan could increase Romania’s gross domestic product by 0.95 percentage points in the first year, in the pessimistic version, and by 4.75 points in the optimistic one, reads the study ‘Juncker Commission investment plan and the potential impact on Romanian economy’, presented on Wednesday during a press conference by the European Institute of Romania (IER).

“The pessimistic scenario is based on the current rate of growth of the capital stock of 1%. From the cumulative graph of the impulse-response function one can notice, that in one year, this rate would lead to a GDP increase of 0.95 pp/year. The realistic scenario is based on an increase in capital stock by 3 percentage points. This contribution would support the current trend of the Romanian economy, thus to a sustained increase in GDP of about 2.85 to 3 pp/year. The forecasts provided by the European Commission for Romania present an annual growth rate for 2015 and 2016 of approximately 2.7 to 2.9% and incorporates the new investment contribution,” the document reads.

The optimistic scenario is based on a 5% growth rate of the capital stock. This rate is equal to the one during the economic boom, before the economic crisis in Romania.

The document points out that the private companies in Romania show little interest for the Juncker plan, a reaction caused by the capital market in Romania.

“Worrying is that the private sector in Romania shows little interest for the Juncker plan. Such unresponsiveness is caused, to a large extent, by the low development of the capital market in Romania, and the lack of ways for private investors to access the available funds,” reads the document.

According to it, Romania needs the resources made available by the European Fund for Strategic Investments to cover the significant development gaps against the rest of the EU.

FinMin Dragu: Romania does not have operations approved under the Juncker Plan

Romania is not among the 25 EU countries with operations approved under the Juncker Plan, Finance Minister Anca Dragu stated in a message to the press conference.

“There are already more than 220 operations approved under the European Fund for Strategic Investments (EFSI) in 25 of the 28 (EU) member states. Romania is not among them; it is important to note, however, that resources amounting to more than EUR 11 billion have been earmarked. These are loans, and the total value of the projects and mobilized investments exceeds EUR 80 billion, which is already 26% of the overall target assumed under the plan,” reads Dragu’s message.

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