Study: Romania needs 13 more years to comfortably join the euro

17 November 2016

Romania needs another 13 years to reach the level of development required to adopt the euro, if it maintains the average growth pace of the last 15 years.

The term could decrease to nine years if the economy grew by 5% per year in a sustainable way, according to a study coordinated by Daniel Daianu, member of Romania’s National Bank (BNR) board of directors, reports local Agerpres.

To adopt the euro, Romania’s GDP per capita needs to reach a level of at least 75% of the EU average and the country has to meet other structural requirements.

If Romania adopts the euro with a big development gap, there is the risk of an inflation significantly higher than in the Eurozone. This would lead to real interest rates lower than in the rest of the Eurozone and an appreciation trend of the exchange rate in real terms, according to the study.

Analyst Ionut Dumitru, the president of the Fiscal Council, an independent think tank that advises the state on the economic policies, thinks that Romania must first reduce the internal disparities before joining the Eurozone. He claims that the disparities between Romania’s regions have grown wider in recent years.

“We are currently at 57% of the EU average in terms of GDP per capita, but Bucharest is at 120% while Vaslui is at 20%. Bucharest, Cluj, Timisoara could join the Eurozone tomorrow, but not the rest of the country,” Dumitru said.

Romania officially drops target to join the Eurozone in 2019

editor@romania-insider.com

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Study: Romania needs 13 more years to comfortably join the euro

17 November 2016

Romania needs another 13 years to reach the level of development required to adopt the euro, if it maintains the average growth pace of the last 15 years.

The term could decrease to nine years if the economy grew by 5% per year in a sustainable way, according to a study coordinated by Daniel Daianu, member of Romania’s National Bank (BNR) board of directors, reports local Agerpres.

To adopt the euro, Romania’s GDP per capita needs to reach a level of at least 75% of the EU average and the country has to meet other structural requirements.

If Romania adopts the euro with a big development gap, there is the risk of an inflation significantly higher than in the Eurozone. This would lead to real interest rates lower than in the rest of the Eurozone and an appreciation trend of the exchange rate in real terms, according to the study.

Analyst Ionut Dumitru, the president of the Fiscal Council, an independent think tank that advises the state on the economic policies, thinks that Romania must first reduce the internal disparities before joining the Eurozone. He claims that the disparities between Romania’s regions have grown wider in recent years.

“We are currently at 57% of the EU average in terms of GDP per capita, but Bucharest is at 120% while Vaslui is at 20%. Bucharest, Cluj, Timisoara could join the Eurozone tomorrow, but not the rest of the country,” Dumitru said.

Romania officially drops target to join the Eurozone in 2019

editor@romania-insider.com

Normal
 

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