Romania will enter a process of economic recovery and in the electoral year 2012 it is expected a mini book, the Austrian International Economic Studies Institute, WIIW, believes, anticipating that the government will give up fiscal and salary austerity as elections approach, Romanian news agency Mediafax reports.
Romania’s GDP will increase by 2% this year and by 4% in 2012 according to the WIIW report. In 2013, the economic growth rhythm will moderate at 3%. At the end of 2010, WIIW analysts estimated a 1% advance in 2011 and 2.5% for 2012. A recovery to the boom of previous years is impossible due to the difficult foreign financial financing but a mini boom is expected in the 2012 electoral year.
Most probably, the year will be followed by a new wave of fiscal stability. Economic growth will depend on the economic policies undertaken and by the answer of capital markets, the report reads. Romania’s economic contraction in the last two years was among the deepest and longest in Europe.
Austerity measures introduced in 2010 caused a supplementary drop of demand internally and had a negative impact of over 1% of GDP for the whole year. Financial security is offered by the IMF agreement and allowed the government to resume structural adjustment, the analysts read. Last year’s fiscal adjustment however was extremely tough and was not well prepared.
Overall, trust in Romania’s fiscal stability increased in the last years, the report concludes. Romania’s agreement with the IMF was considered a success and the fiscal plan for the next two years is considered sustainable. There are however, plenty of uncertainties related to the future economic trajectory.
None of the three governments of the last two years managed to offer a fiscal program that was credible and that could actually be implemented. We expect the go
