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February 3, 2023
ECONOMYFINANCE&BANKING

FinMin Caciu: Romania has the most stable economy in the region, year-end growth exceeds 5 pct

Romania has the most stable economy in the region and will end the year with an economic growth of over 5 percent, finance minister Adrian Caciu said, cautioning however that 2023 will be a difficult year, still bearing the brunt of the inflationary flare-up and where the difference will be made by the maximum use of public policy instruments directed towards investments, reforms and the support of vulnerable categories.

“In this economy-wise most complicated year since the Second World War, allow me to thank you for the solidarity, trust and understanding you have shown in this period that has strongly affected (at least through the high inflation) not only the national social and economic environment, but also the entire European Union and the global economy. In complicated times, solutions are built on seven pillars: courage, reason, stability, security, protection, solidarity and support. This is what we did, this is what we will do! (…) Beyond the concerns generated by the effects of the Russian aggression in Ukraine, we have been together through the far from easy trials of this year. More than 80 percent of you participated in this effort, beyond political sympathies or antipathies, and the results are visible. We are one of the most important providers of regional and European security. (…) We have the most stable economy in the region (at a time when financial markets were hit by a volatility that has not been seen since the 2008 crisis) and we close the year 2022 with an economic growth that will exceed 5 percent, an effective response of the economy and the government to the cost pressures put by inflation and interest rates,” the finance minister wrote on Saturday on Facebook.

He emphasized that it was possible to restore the economic potential and stabilize the economy, which produces 214 billion RON more than in 2021.

“It’s a major advance of 44 billion euros, and 2022 will be the year when the number of newly registered companies will top the 150,000 line, while the number of insolvencies remains far below record highs, being close to the minimum levels of the last 12 years,” Caciu pointed out.

He also highlights political stability, but also the “solid” partnership between the government and the social and economic environment, which was the basis for most of the measures taken.

“The governmental effort achieved on the basis of this partnership exceeded 10.7 percent of GDP, 149 billion RON (6 percent in direct support to the economy and citizens, respectively 83.8 billion RON in nominal values, and 4.7 percent in indirect support through tax credit, or 65.2 billion RON in nominal values) and was consolidated by the entrepreneurial effort put into boosting economic activities, increasing the gross added value and workforce employment,” Caciu also wrote.

 

The finance minister expects 2023 to be a difficult year, still marked by the inflation flare-up (even if inflation will eventually temper – but for this, a continuous effort is needed throughout next year), complicated from an economic point of view and snagged by the visible slowdown of strong economies that will also affect emerging economies such as Romania, a year in which the difference will be made by the maximum use of public policy instruments aimed at three levels: reforms, investments and support for vulnerable categories.

 

“The government effort defined through fiscal-budget policy measures will exceed 14.7 percent of GDP (228 billion RON), of which the tax credit (indirect channel) represents 4.9 percent of GDP, and the measures for the economy and the protection of vulnerable categories amount to 9.8 percent of GDP. It will be a year of investments, with a bold program of 7.2 percent of GDP (112 billion RON) and government programs intended for the economy. We must invest massively in Romanian companies so that our economy is centered on the production of high added value goods! It is paramount to reduce dependence on global and regional supply chains! Only if we put economic productivism in the foreground, focusing on domestic production, can we hope that the Romania of the future will no longer rely on a consumption economy,” Adrian Caciu specified, according to Agerpres.

He also emphasized that sustained reforms are needed in education, health, economy and administration, that poverty must be reduced “in all its forms”, and emphasis must be placed on the most important element of a nation’s capital, namely the human capital.

The finance head also mentioned that a series of reforms must continue, including the reform of the social security system, sorting out wage inequalities, increasing competitiveness and reviving exports, counteracting the rising inflation etc.

“And I think that most importantly, against the current background, our short-term priority should be to protect the vulnerable categories. All these measures which aim to offset the rising inflation rate, protect jobs and help Romanian companies get through this complicated period represent priorities for the Romanian government. All this will be done together! Therefore I am convinced that through solidarity and empathy towards the disadvantaged and, above all, by supporting through adequate programs all employees and companies that produce in Romania, we will manage to overcome this complicated period. Finally, apart from thanking you once again, I wish you a better year 2023 with many achievements and I urge you to look to the future with confidence and solidarity! We accomplish the future together,” Adrian Caciu said in conclusion of his message.

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