The BNR governor, commercial bankers and analysts on Thursday discussed the current problems of economic growth in correlation with the trend of inflation and of the exchange rate. Isarescu said from the very beginning of the talks there would be no final conclusion, saying “political decision makers” needed to draw the conclusions.
Over the course of the debates, which extended for over three hours, the BNR governor didn’t make any direct reference to the depreciation of the Romanian currency in the past few days. In the meantime the leu neared its all-time low, hitting RON4.5252 to the euro, and a new low against the dollar, at RON3.7031 to the dollar.
The new model of sustainable economic growth for Romania continues to be an enigma and one of the challenges and subject of endless discussions more than three years after the start of the crisis. Only the traditional solutions were mentioned during the debate: European funds and foreign investments.
Isarescu says Romania should create jobs and increase its productivity in order to have economic growth, and that investments are essential.
As domestic investments are limited and there are no mechanisms to stimulate savings, Romania remains dependent on foreign capital and on EU funds, says the BNR Governor.
The National Bank is concerned that banks that have launched savings products in euros at interest rates of 5% could see losses and erode their capital.
The methods that the central bank can use to support economic growth have also been discussed, and one of the conclusions was that Romania cannot use the exchange rate, inflation or interest rates to stimulate economic growth.
Stimulating consumption is one of the solutions often cited as a driver of economic growth. Isarescu warns that, given the current structure of the Romanian economy, consumption growth inevitably leads to more imports and to the deterioration of the current account deficit.
“When we are talking about economic growth prospects, we have to keep an essential aspect in mind: capital inflows. Over the next period, we cannot expect inflows the size of those we had before the crisis. The growth model and growth rates will be completely different from those we were used to,” commented economic analyst Aurelian Dochia.
(English version by Daniela Stoican)