ECONOMY FINANCE&BANKING

BNR’s Georgescu: Romania’s economic gap compared to EU countries reduced, but GNI – GDP ratio deteriorated

Romania’s economic gap compared to countries of the European Union has reduced, but the ratio between the gross national income (GNI) and the Gross Domestic Product (GDP) deteriorated over the past 17 years, according to a presentation of First Deputy Governor of the National Bank of Romania (BNR) Florin Georgescu.

“Over the past 17 years, in Romania, the convergence in GDP terms per capita [at purchasing power parity – PPP], accumulated 33 percentage points (from 26 percent of the EU average in 2000 to 59 percent of EU average in 2016), being the second highest of the former communist states after Lithuania (+38 percentage points). The ratio between the national gross income, which represents the added value obtained by Romanians in the country and abroad, and the GDP, which stands for the gross added value obtained in the country by Romanians and foreigners, has dropped by 1.8 percentage points, from 99.3 percent in 2000 to 97.5 percent in 2016,” according to the document.

According to the cited source, the development is similar with the one recorded in Lithuania (-1.7 percentage points) and Poland (-2.6 percentage points), but smaller than Hungary’s (+2.8 percentage points).

“However, the steady progress recorded in terms of the volume of economic activity has been characterised by a relatively modest degree of inclusion. The real convergence reflected only marginally in the growth of the number of employees and, partially, in their purchase power growth. The number of employees increased between 2000 and 2016 by only 2.2 percent (+100 thousand people), from 4.6 million people to 4.7 million people. Employees’ purchasing power increased by 20 percentage points (from 22 percent in 2000 to 42 percent in 2016) compared to over 30 percentage points additional in terms of the activity volume, given that the payment of work force has increased from 9 percent of the EU average in 2000 to 22 percent of the EU average in 2016 (=13 percentage points), and the level of prices developed from 40 percent of the EU average in 2000 to 52 percent of the EU average in 2016 (+12 percentage points),” the quoted source mentions.

The development of employees’ purchasing power, from a regional view, was relatively similar.

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