World Bank chief-economist: Romania should stimulate long-term growth

Romania should focus on long-term growth and be cautious on the short-term as danger is close, Hans Timmer, World Bank chief-economist for Europe and Central Asia said at a press conference in Bucharest. “We see progresses in the economies in the region, unemployment rates are lower even than before the global economic crisis, which is also valid for Romania. The current account deficits have declined and, in many countries, the fiscal systems are healthier. But we are worried about several aspects,” he said, local Agerpres reported. The technological changes and monetary policy tightening in the following years will take the economies in the region to uncharted territory. “Danger is getting close in a way we haven’t often seen in the past. This is why it’s very important to be cautious about the policies. Don’t increase current account deficits and keep the fiscal situation under control, maintain a stable banking system and make sure that private debt doesn’t get out of control, as you will need all safety nets in the following period,” Timmer said. The World Bank economist also said the Government should rethink the whole social protection system in Romania, because young people find no protection under the current mechanism. Moreover, the authorities should consider a progressive tax system for individual revenues to replace the current flat tax. “Politicians lose votes among the young population because the social protection systems are no longer valid. Countries should rethink their social systems and labor regulations so that they don’t favor only those with permanent jobs,” he explained. World Bank economist looks into migration negative and positive effects on Romania editor@romania-insider.com