The economical crisis in Romania will worsen in 2011.
Monday 6 September at the Institute of International Relations and Economic Cooperation headquarters was held the conference: Romanian economy in 2011. Fast forward towards collapse. The conference has joined economical experts from Romania and European Union, economical supervisors and personalities of political, economical and academic life of Romania.
2009 and 2011 – first years of economic crisis.
The conference started with an evaluation of economic crisis impact in the period of the first years: 2009 and 2010. In the first year of the crisis in Romania -2009- the economic crisis has affected the less important area of economic life: the collapse has started with construction industry and construction material factories, collapse started by the real estate market sinking. Others affected sectors where: insurance, banking and stock exchange and in all the financial sector was strongly shaken down. The consummation has fallen sharply and the Gross Domestic Product (GDP) has being reduced with 10% in 2010. The decrease in our economy has being so devastating that we are back at the 2000 level. Unfortunately the economic collapse of 2009 and 2010 has put the foundation for a crisis without equivalent in Romanian history that will affect the country in 2011 and 2012.
2011- The year of economic earthquake.
2011 will be without a doubt the year of economic turmoil in Romania had appreciated in one voice all the experts present at the gathering. First of all the 2011 will be the year that will pay for all the economic collapse of the last years. The financial system will be hard hit and this will make the fragile Romanian economy to reach the breaking point. The inflation will resurface and the experts appreciate that a 10% percent yearly inflation will be unavoidable.
The resurgence of inflation will put a dramatic pressing on population economy and will make any recovery unthinkable for the next 1-2 years. The collapse in economic system, the internal and external investments will be reduced to minimum, the credit on internal market will be suspended and all this will provoke next year an economic decrease of more than 15% of GDP or even 18% of GDP after others opinions. A factor not to be neglected in amplification of the crisis in the governmental incompetence that by increasing the taxes, legislative chaos and a deliberate politics of destroying the middle class investor in the favor of big companies all did nothing ells than to aggravate the economic crisis.
2012 – between crisis and slowing down economy.
The 2012 will be a decisive year to slow down the economic collapse or to direct the economy in a new catastrophic decline. It must be very clear, all economic experts underlined, that the present economic decline will last for a decade at European level, so all those opinions that declared that Romania will start a new economic growth before the next 10 years either don’t know what they are saying either is bluntly laying. All the European statistics are speaking about the lost decade of Europe between 2010 and 2020 , term referring to the blocking of economic development at continental level and the frozen of present situation for a decade. Those that are declaring that Romania will surpass in the period of economic crisis the France or Great Britain economy , are telling stories that are unbelievable , declared laughing Mihail Racaceanu – chief economist. What is important is to succeed that we have in 2012 a decrease in economy of less than 10% and in the interval between 2012 and 2015 to stop the decline and in 2020 to come back to pre-crisis year of 2007 and in 2050 at the pre-revolutionary level of 1989.
In 2050 the Romanian economy will reach the 1989 historic year.
This assessment was a strong one, keeping in mind that the pre-crisis governmental statistic declared that in 2025 Romania will succeed in recuperating the gap and reach the level of industrial activity prior to 1989 Revolution. This perspective is no longer feasible, a new perspective is appearing after the crisis and after the lost decade and a cumulative GDP decrease of more than 60% from 2007 economy level. This economic recession will be hard to recuperate in the context of nongovernmental involvement, the general economic climate of recession and finally the worst factor of all: the burden of external debt.
External debt will plunge Romania into financial meltdown.
The factor that will suffocate Romanian economy in the next period will be after 2015 the foreign debt crisis. The Boc government has careless accepted more than 16 billion dollars credit and in total the private and state debt of Romania is reaching the unbelievable sum of 65 billion dollars, this only if the government will no longer accept new loans. But this perspective is an unrealistically one as President Traian Basescu has announced new external loans for 2011 , that will surely bring Romania to being incapable to pay the foreign debt.
The economic crisis is worsening.
The conclusions of the most important economic experts of Romania where clear: the crisis is not over but has entered in a more difficult faze that will affect financial and banking system and economic fundaments. The economic crisis will continue until 2015 at the earliest and a coming back cycle that will last until 2020. This decade will be without a doubt the lost decade of Romania but if the necessary measures are not rapidly taken to re-establish control on economic decline than we risk that Romania will not come back economy not even in 2020.