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August 15, 2022

Negritoiu: Recession could come back to Romania

The fact that we neighbour Hungary could be fructified through pragmatic policies, ING Bank president also said.

The president of the local subsidiary of ING Bank, Misu Negritoiu, believes we have several reasons to believe that 2012 will be a more difficult year, according to an interview he gave to HotNews.ro. In his opinion, a first reason could be the deepening of the sovereign debt crisis amidst mounting recession – euro zone economy will shrink following the transfer of tension from financial markets to the real economy (the result of austerity measures), with an impact on Romanian export. The second reason could be the closeness of the moment when decisions are to be made on issues in the euro zone such as the fiscal union which was only proposed in 2011, a subject which ‘will need to be truly addressed, as markets will continue to be subject to tension until it is established who will pay for the excesses of the past.’ The third reason is that ‘no economic growth strategies have been shaped yet and the resolution of fiscal issues without economic growth is extremely difficult, including in Romania’, he continued. As for the return of recession, Misu Negritoiu deems it probable, especially in the first half of 2012 amidst forecast developments in the euro zone (as described above) combined with a reduction in the exposure of European banks forced to improve solvability. ‘2011 was an exceptional agricultural year, but that will turn into a shortcoming in 2012: even if the total GDP growth is anticipated at 0.5 – 1 per cent, it looks more like stagnation, without agriculture it would already be a great success (with a probable correction of 3 – 4 per cent of GDP because of agriculture)’, he explained. In the banker’s opinion, the three biggest risks are the management of public debt and financing or budget deficit – a more complicated thing in 2012 –, the inflation trend which will probably reverse (the ING Bank year end forecast indicates an inflation rate of 4.2 per cent because of the rise/correction of prices, agricultural products included, in H2) and a slow-down if not even a stagnation in the process of fiscal consolidation given the ‘electoral year’.

In Negritoiu’s opinion, in order to attenuate the effects of the crisis, Romania could shift the focus of attention from austerity measures – most of which have been already implemented – to pragmatic measures in the field of real economy, capitalisation on local resources, attraction of foreign investment by ‘wise’ measures which would be even more welcome in a country neighbouring Hungary, stimulation of income and consumption by creating jobs and raising productivity. As far as a possible dissolution of the euro zone, the ING Bank president thinks it’s not going to happen. ‘It could narrow down (possibly without Greece?) at most, but the euro zone will exist at least in the form of the France-Germany tandem in a worst case scenario’, Misu Negritoiu concluded.

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