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July 16, 2024
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Opinion

Romania’s economy grows whereas European economies contract

Global economy – factors and aspects

Although the Romanians might not notice, as the economy of their country has increased in the last two years by 7% in 2017 and by 4.1% in 2018, the economies of most big European contract. The strongest contractions were recorded by the economies of countries such as Germany, where the unemployment rate exceeded 5%, Italy, where the public debt reached a ceiling that analysts remind of Greece, and the United Kingdom, here the economic downturn is an anticipation of what will follow after Brexit, planned for this fall. Ten years ago, when Europe was in a crisis, like the countries over the ocean, a crisis generated by subprime bonds in the US, Romania was also in a full economic crisis. Only one country in Europe would survive the crisis without problems, moreover, it would register economic growth. That country is called Poland, the first country in the former communist bloc that managed to have a developed economy, a country that exports intelligence, products and services at a high quality level. Can Romania compare today with Poland in 2018 in terms of the evolution of economic indices? Hard to say now, especially since the situation is now fundamentally different from that of 2018: now, unlike then, we are not in a global recession, not even in a recession at European level. And yet, all analysts are talking about the emergence of a new financial crisis, or a slowdown in global growth.

Gloomy outlook: Global economic growth will slow to 2.9% in 2019

According to the data provided by the World Bank, global economic growth will slow down from 3% (already revised in 2018) to 2.9% in 2019, in the context of the outlook for negative evolution risks. It has been found that global trade and production activities have slowed, trade tensions have remained high, as is the dispute between the US and China, and some large markets are facing substantial pressures from financial markets. The world economy is facing a huge debt burden more than a decade after the financial crisis. Growth in emerging and developing economies is limited by low investment and there is a danger that the trend will become downward. Risks include the emergence of barriers to trade development, the re-emergence of financial tensions and a slower than expected in several major economies of the world’s states. Globally, the economic growth will be reduced to 2.9% in 2019, under the conditions of reducing investments and trade and as a result of the tightening of the financing conditions. Even under these conditions, the forecasts for Romania remain unchanged: economic growth of 5% in 2019.

The problems of economic growth

There are very serious problems facing global economic growth on several fronts: trade, debt, geopolitics, climate, and all of this due to poor global leadership, because trust in traditional institutions, both domestic and international, is declining. very fast. The UK was considered the fifth largest economy in the world by the IMF in 2018. Based on the IMF’s forecasts, it is likely to be overtaken by India in 2019 and possibly France. As for the UK economy, the IMF, for example, claims that it predicts a growth of the British economy in 2019 by only 1.5%, but based on an orderly Brexit. If Brexit is to occur without agreement, then there is virtually no forecast, which can have serious repercussions at European and global level. However, it is expected that the European economy will grow slightly for the seventh consecutive year in 2019, with expansion forecasts targeting all Member States. However, it is estimated that the overall growth rate will be moderate compared to the high levels of the last years, and the future is marked by a high degree of uncertainty. Expert opinions are also confirmed by a number of official statements. In a press release from the European Commission, EU Commissioner Pierre Moscovici states that: “After the maximum of 2017, the slowdown of the EU economy will continue in 2019, up to 1.5% growth. This slowdown will be more pronounced than expected last fall, especially in the euro area, due to global trade uncertainties and internal factors in our largest economies. Europe’s economic fundamentals remain solid and we continue to see good news, especially in terms of employment. Growth should gradually return in the second half of this year and in 2020 ”.

Romania is in the third consecutive year with economic growth

On the other hand, the Romanian economy grew in the first quarter, compared to the same period last year, with 5% gross series and 5.1% on seasonally adjusted series, shows the first published estimates, by the National Institute of Statistics. Hungary, Romania and Poland registered in the first quarter of 2019 the most significant advance of the economy in the European Union, compared to the similar period of 2018, according to the data provided by the European Bureau for Statistics. In the last years Romania has had one of the fastest growing economies in Europe, registering the third consecutive year with economic growth. It is about the economy where the main role plays especially the industry but which also has great potential in agriculture due to the favorable natural conditions. A significant role in the industry plays, first and foremost, the manufacturing sector, in particular the manufacture of machine tools or means of transport and its parts.

In conclusion

The conclusion? There are very serious threats to global economic growth on several fronts: trade, debt, geopolitics, climate, and all this due to poor global leadership, due to the fact that trust in traditional institutions, both domestic and international, it drops very fast. However, the Romanian economy in recent years is in good shape. If the current rate of growth continues until the end of this year, we can hope that Romania will be able to overcome a possible large-scale contraction of the world economy. Although, as economic analysts say, no crisis resembles another.

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