Romania’s economy is not facing a crisis risk, but “the macroeconomic situation is unbalanced," American economist Nouriel Roubini said at a Profit.ro conference in Bucharest on November 11.
The Romanian state has oriented most of its expenditures towards consumption and less towards investments in recent years, which has led to an increase of the external deficit, over a budget deficit. The two are worrying, Roubini says.
The economist warns that the deficit could double from 3% of GDP, as estimated by the European Commission.
The wage push largely attributed to public policies only increases such deficits unless it reflects productivity growth, he warned.
Besides the “twin deficits,'' Roubini spoke about the interest rates that are higher than in the region given that the increase in consumption has also generated inflation, and he recommended the central bank to tighten monetary policy.
On the upside, Roubini believes that reforms could bring Romania’s growth to more than 3-4% per year, which would make it an example of success in Europe.
Nouriel Roubini became famous worldwide after predicting the 2007-2010 global financial and economic crisis several years in advance.
(Photo: World Economic Forum/ Wikipedia)