The Economist on the Romanian economy: Brace for stormy times

The Economist magazine has joined the chorus of voices warning of a tough time in Romania in 2012. Despite heartening recent growth figures, a number of factors are seen as potentially threatening Romania's economic well being in the coming year. The Economist article draws attention to “knock-on effects from the eurozone crisis, a banking squeeze and loan repayments to the IMF due next year,” as potential sources of financial woe. Also mentioned are the deficit reducing measures planned- an upcoming public sector pay freeze, charges for healthcare and privatization of some state assets. The Romanian Government wants to reduce the budget deficit to 1.9 percent of GDP in 2012 but the Economist calls getting the 2 percent growth necessary to meet this target a “rosy assumption.” The article also draws attention to banking sector worries. Greek owned banks account for around 16 percent of Romania's banking sector and President Traian Basescu recently and very publicly denounced Austrian banking groups' plans to cut back funding to Romanian subsidiaries, reported by Romania-Insider.com here. Fees towards the cost of healthcare will, according to the Economist, cause outcry in Romania and corruption is again deemed a big problem This comes after a recent study on perceived corruption put Romania among the very worst in Europe. The Government's approval rating for its handling of the economic situation situation stands at just 7 percent and very few Romanians expect an end to recession anytime soon. Read the full Economist article. Liam Lever, liam@romania-insider.com (photo source: The Economist, latest issue)