Selected papers~ SPECIAL EDITION - Index of

change)
Terms of trade
(percentage
change)
Nominal GDP
(in mil. lei)
Nominal GDP
(in mil. Euro)
2008 2009 2010
Est.
2011
Project.
21
2012
Project
2013
Project.
2014
Project.
2015
Project.
2016
Project.
2.8 -0.4 -1.8 -0.7 0.6 0.4 0.7 1.1 1.1
514,700 498,008 513,641 542,035 590,247 643,816 703,827 770,546 843,680
139,666 117,558 122,062 127,237 140,658 156,307 174.317 194.107 216.339
Source: Estimates and projects of the Romanian authorities and the IMF staff.
1/ Real fiscal balance adjusted for the automatic effects of the internal imbalances (output gap) and external
imbalances (absorption gap) in the fiscal position.
The analysis of data on the economic and financial indicators in Table 2.1 highlights some
challenging issues of major significance.
It is that economic growth in Romania has gone from relatively high values in 2008, to sudden
and major slumps in 2009 and 2010, the real GDP moving from a growth of 7.3% to decreases
of -7.1% and, respectively,-1.3% for 2011, the forecast having been 1.5%.
These large and sudden changes in amplitude indicators show a case of strong shock that
Romania went through, with severe enough consequences on short, medium and long term.
From these shock cases we should draw lessons in the sense that the way economic decline
occurs is important as well and one must always be prepared. Statements of decision makers in
Romania in September 2008, that the international financial crisis "will not have direct
effects" on the Romanian economy, showed how far they were from the truth:
- Projections for the years 2012-2016 show rather relatively equal annual developments, which
of course is only a desirable perception of quite variable future developments;
- External debt as weight in GDP increased from 51.4% in 2008 to 78.9% in 2011, and in the
next four years until 2016 it should stay at a high level, although with a downward trend,
without reaching the level of 2008, which means that the decline triggered by the crisis, in
some cases, will not have been recovered even by 2016;
- Inflation is at relatively high rates in 2008-2010 and then stays quasi-constant at an annual
level of 3% which by far cannot be considered as a convenient (comfortable) one;
- The ICOR (incremental capital - output ratio) shows a decrease of expected economic
performance and efficiency which is contrary to the sustainability of external debt and the
ability to meet external debt service. Added to this is the continuation of chronicization of the
deficits of the trade, services and income balances, during 2011-2016;
- The gross international reserves are expected to increase to 47.3 billion euros as compared to
36 billion euros in 2010. The sources of growth of such reserves if they consist of new
borrowings are not a factor of the strengthening of sustainability.