“Following this crisis, the borrowing costs will remain at all-time lows worldwide for a few years from now on. This is the best time to invest in the economy. The shock caused by the pandemic led to a rise in flexibility on the labor market. We need to focus towards consumption of goods and services made in Romania, we have a chance to even out the foreign balance,” Andrei Radulescu said on ZF Live.
Romania’s economy will recover from the pandemic shock in 2021. The nominal GDP will reach the 2019 value, EUR220 billion, and the real economic growth will stand at an annual value of more than 2.5% in 2020-2022.
“As for the impact of the pandemic on Romania, the uncertainty about the short-term trends is very high. The stronger the impact this year, the more significant the reboot next year. In a medium-term scenario, between 2020 and 2022 we expect the GDP of Romania to grow at an annual rate of more than 2.5%. There are already clear signals of a start of a new economic cycle and we have this set of fantastic opportunities.”
This year’s economic decline reached its peak in April, Andrei Radulescu added. The data he looks at includes Germany’s economy, into which Romania’s economic chains are integrated, as well as the national power consumption.
“I think the economy reached the peak of the crisis induced by the pandemic shock in April. If we look at power consumption data, we will notice a significant decline in power consumption compared with March and April 2019.”
The exchange rate will be at around RON4.93/EUR, Andrei Radulescu says. The leu-euro exchange rate has remained relatively stable during this crisis, compared with the domestic currencies of other countries in the region.
“The trend of the exchange rate after this shock in Romania should not be surprising. We entered the crisis with a significant trade deficit and then, with the restrictions in place to fight the health crisis, we saw a significant decline in imports. The average annual level of exchange rate for 2020-2022 is forecast to be at about 4.928 at this time.”
(English version by Loredana Fratila-Cristescu)