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February 3, 2023
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Economy Romanian News

Romania: What’s Hidden Behind the Biggest Economic Growth in Q1 in EU

The European Union’s economy grew by 0.4% in the first quarter of this year compared to the end of 2021. The increase is 5.2% compared to the first quarter of last year. As incredible as it might seem, Romania had the highest economic growth rate in the EU compared to the previous quarter.

According to Eurostat, the 19 Eurozone countries’ economies grew by 5.2% earlier this year compared to the same period in 2021 and by 0.3% from the fourth quarter of 2021 to the first quarter of 2022.

Photo source: Eurostat

Romania’s GDP increased by 6.5% in the first three months of this year compared to last year. The increase was 5.2 % compared to the end of 2021, the highest recorded by any EU country. The Romanian Institute of Statistics confirmed the same data this morning.

Is Romania the EU’s champion, or what’s hidden behind this growth?

Romanian Chamber of Commerce and Industry President, Mihai Daraban, talks about the other side of the coin. Although it seems that Romania is on the right track, even a progressive one, this percentage is, in fact, not favouring the Romanian economy. This economic growth comes from the domestic consumption of imported goods, meaning Romania’s real financial gain went to other countries exporting these goods to Romania.

I think we need to think about this 94.8 billion euro figure that we imported last year. Let’s see what that means, because the import figure is probably the most eloquent mirror of the consumer. It is very good to have an increase in the gross domestic product on consumption, but it depends on what consumption. If it’s imported, we didn’t do anything. If we try to consume Romanian production, we can really talk about sustainable and healthy economic growth. Otherwise, everything is a mess.

Mihai Daraban, President of the Romanian Chamber of Commerce and Industry

In other words, as good as the figures in the Eurostat table on Romania’s situation show, this is not good news at all. Due to the anticipation of the economic crisis, lately, Romanians have started to buy much more, fearing that prices might rise even higher, and as the Romanian market is full of exporters, Romania did not have anything to gain but to lose. We can speak of an economic loss and not of economic progress.

When Eurostat tells us that we are in the last place in the EU for research and innovation, you have to ask yourself some questions and start opening this place, to realize that we don’t really have Romanian products with high added value … The reality is told including export figures, and import figures.

Mihai Daraban, President of the Romanian Chamber of Commerce and Industry

For a country such as Romania to fuel its economic growth from consumption and not investments, this spells economic disaster in the future. Considering that the foreign investors have lost their appetite for pouring their money into the Romanian economy, there’s no wonder why the Romanians working abroad have recently become the biggest foreign investor in Romania.

So, who is right here? The Government tells people the economy is strong and that they live well, or the specialists who are alarmed by the current trade deficit and how the Romanian economy is really behaving. One thing is certain: each time optimistic statistics are displayed, there is a strong need to look at what happens behind the scenes carefully. The devil is always in the details.

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