Economic crisis becomes increasingly likely scenario

With the high energy prices slowing down the economic activity, the technical recession scenario is becoming increasingly likely in Romania as elsewhere in Europe.

Speaking for local TV channel Digi24 on Thursday, April 7, Social Democratic Party (PSD) president Marcel Ciolacu admitted that the Romanian economy might have to face an economic crisis soon. But, he added, it is for the first time that a crisis is anticipated and a plan of support measures is being prepared.

"We may face an economic crisis, without a doubt, we also had a discussion about this with the European Commissioner for the Economy, [Paolo] Gentiloni," the PSD leader said, according to G4media.ro.

Ciolacu's Social Democrats are preparing a package of economic and social measures with a cost of RON 17.3 bln (EUR 3.5 bln) to help households and firms weather the crisis.

Florin Citu, former prime minister and former head of the Liberal Party (PNL) - an economist by education - expressed even stronger expectations for an imminent economic crisis.

"Romania's economy will post an economic growth close to zero this year. The budget is built on an assumed economic growth of 4.6%. With a high probability, we will enter a severe economic crisis. This collapse of the economy cannot be avoided now. It's too late," Citu wrote on Facebook on Thursday, Economica.net reported.

He reiterated his proposal for preparing the households for the crisis by cutting by 5pp the social security contributions. This would cost the budget only RON 6 bln, he argued.

Other measures proposed by Citu are accelerating the reforms regarding the pensions and salaries in the budget sector; enforcing all milestones in the Resilience Program PNRR, no matter how difficult they may seem; and investing at least 7% of GDP from the budget.

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