IMF: Romania’s economy recovers slower than other countries and should take advantage of opportunities

 Romania had last year the best performance in terms of increase in the area. Latvia was the only country with better results but structural reforms and acceleration of European fund absorption are necessary to maintain growth. Better progress is expected, said Guillermo Tolosa, the IMF resident representative for Romania and Bulgaria at a press conference on financial control, held on Thursday.

Romania’s GDP was about 140 billion dollars in 2008, before the economic crisis. Last year, economy grew by 3.5% and an increase of 2.2-2.5% is expected this year. Annual growth rates of over 5% over 2001-2008.

He showed that economic performance depends too much on factors like weather, that influences the evolution of agriculture, which contributes with 6% to GDP.“Agriculture remains an important economic growth factor, but makes economy vulnerable to shocks. Oscillations on the background of that factor are recorded annually”, Tolosa said.He pointed to the fact that Romania should take advantage of opportunities it has to support and accelerate economic advance, that is intensive attraction of EU funds and concentrating on exports and energy.

The IMF official showed that exports from Romania represent only 40% of GDP, while in other states they reach 100%.“If we take into account exports to Germany, the Czech Republic exports 25.5% of GDP, Hungary has 21%, while Romania has only 6.4% exports to Germany, four times less than the Czech Republic. It is a huge opportunity for Romania to develop this segment,” Tolosa showed.

At the same time he says that Romania has a diversified energy source and should take advantage of it, as there are many sectors in the power industry with growth potential. Moreover energy has a share of just 10% of overall imports, while other countries have 30-35%, an aspect which could be speculated for economic development.

On the other hand, the poor absorption of EU funds ranks Romania last, a deficit which it should cover rapidly, as states like Poland took advantage of European money to recover from the crisis and resume sustained economic growth.“Someone from the European Commission told me: Foreigners have taken money from Romania and now they are placing money on your table and Romanians say ‘no thank you’! What is going on? The idea seemed funny to me” Tolosa said.

Infrastructure is one of the chapters which slow down economic evolution, Romania being at considerable distance from the other EU states about the situation of infrastructure, especially the one in the field of railway and electric transport, only Bulgaria being on an inferior position.

At the same time the significant state control on companies in various sectors negatively affects their evolution, Tolosa said, pointing to the fact that arrears recorded by state companies represent 1% of GDP.

 “State companies represent 56% of the energy and gas sector. In many key domains the state still has an important control and is not efficient. Generally, state companies have massive losses, supply low quality services and are not competitive,” Tolosa considers. (source: actmedia.eu)