The yields of the bonds issued by Romania will be higher than those in the EU if considering the economic growth by 4.5%-5.5% a year, higher than that expected in the European Union, Valentin Lazea, NBR's chief economist on Monday said.
Specifying he was merely voicing his opinion, Lazea said a 4-5% yearly "cruise speed" of the economic growth is more desirable than a 7-8% one, followed by years of slowdown. "A 7-8% growth would strain the economy too much and led to inflationary or current account deficit problems," Lazea explained.
He says Romania could attain this pace if 95% of its politicians would agree on the reform.
The preliminary statistical data for last year point to an economic growth of about 4.8-4.9% of the Gross Domestic Product, slightly above the target revised in mid year, mainly because of the agricultural problems. Domestic consumption has become the drive behind this growth, given that the exports are expected to take a sharp plunge this year, progressing by only 5% or 6%.
The economic growth target for 2004 is 5.5% of GDP, which would actually bring the Gross Domestic Product to the 1989 level. This could be the fifth year of economic growth in a row for Romania, after 1.6% in 2000, 5.3% in 2001 and 4.9% in 2002. "Don't even think that the privatisation of the utilities will send us right away from a vicious circle that has been in place for fourteen years to a virtuous circle that will allow us to achieve a higher economic growth without affecting other indicators," Lazea explained.
The NBR official specified the Romanian economy had a series of peculiarities that did not allow for a high growth pace without disturbing the balance of the current account or rekindling inflation. "Whenever growth was pushed for in Romania of the last 14 years, we had trouble with either the inflation or the foreign deficit."
Lazea added the trade balance deficit would not be a problem if the foreign currency inflows derived from exports and services were sufficient.
"The other countries in the Central and Eastern Europe are experiencing trade deficit problems, too, but they have the service economy running," Valentin Lazea says. Things are just the opposite as far as Romania's balance of foreign payments is concerned, as the increase in the trade deficit upsets the service balance even further, along with a decrease in the transport service balance surplus.
sorin.pislaru@zf.ro ; razvan.voican@zf.ro
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