The recent growth may be risky, though, because it is mostly driven by consumer spending helped by interest rates at all-time lows. In comparison, interests stood at more than 100% a year in 1999, something unimaginable for those used to interests varying from 1% to no more than 4% a year.
Another amazing thing is the current inflation level compared with the figures of the Romanian economy in 1999. The annual inflation rate is expected to reach 2.7% at the end of 2017, after two years, 2015 and 2016, of deflationary threat looming over the local economy. Nineteen years ago, no one would have thought Romania would be trying to avoid negative inflation someday, considering consumer prices would go up by more than 40% a year.
The only one to have lost ground in the past nineteen years is the leu, as it depreciated against the main currencies – euro and US dollar. It lost more than 250% against the two since 1999.
While it took 1.3 lei to buy one euro in early 1999, now it takes more than RON4.6 to do that. The leu/dollar exchange rate is now almost 4 to 1, compared with only 1.1 to 1 nineteen years ago.
A weaker leu, however, helped exports, which are eight times higher today than nineteen years ago. Nine months into 2017, exports reached more than EUR46 billion.
The export structure changed, as well. Whereas almost two decades ago, Romania specialized in textile industry, working for foreign partners under toll manufacturing contracts, it switched to means of transportation as of 2008, with the increase in Renault-owned Automobile Dacia exports. How will Romania’s main economic indicators look like in nineteen years?
(English version by Loredana Fratila-Cristescu)