Romania’s "blistering" growth story reaches New York Times front page
New York Times, one of the most important US newspapers, has dedicated the cover story of today’s international edition to Romania, Europe’s fastest growing economy. It’s a rare occasion for Romania to get such a high international exposure, but the tone of the article is not that flattering.
The story focuses on Romania’s “blistering” economic growth of 5.8% in the first half of this year but casts doubt on the country’s capacity to sustain this pace. “Much of the growth Romania has experienced is the product of a consumer bonanza — one financed by public sector raises handed out by a government whose populist generosity is pressing the killjoy limits of arithmetic,” reads the article.
The author writes that the government has been cutting infrastructure investments to raise salaries and pensions, “a decision not unlike withholding a child’s college tuition to finance a new swimming pool.”
The article also points out Romania’s contrasts, such as the modern offices next to old derelict buildings in Bucharest and the fact that “donkey carts still operate in the countryside,” and that the government is trying to reduce the income gap to western Europe countries by artificially increasing wages.
It also touches the issue of the fight against corruption in Romania, one that the current government has been trying to weaken since the beginning of this year, causing concern among international investors.
The unpredictable legislation is another factor that keeps investors worried. “In recent weeks, the government has outlined plans to force state-owned companies to hand over their cash reserves. In a contentious move, it has proposed shifting pension funds to shore up those for older workers,” the article goes on also mentioning the highly-debated VAT split project. It then moves to infrastructure: “Among the biggest concerns is what the government is not doing — upgrading and expanding Romania’s notoriously awful infrastructure.”
The New York Times article comes just as some 100 US company representatives are in Romania attending the Trade Winds 2017 business event, where the local officials are trying to convince them of the country’s great potential for investments.