Speaking at the presentation of the bank’s quarterly inflation report, Isarescu said the government has limited resources to ensure an economic growth in 2013.
“If we cannot bring in European money, we cannot talk about economic growth (…). Public investments are down instead of growing higher and the latest discussions hint to more cuts in the coming period,” Isarescu said.
The central bank’s chief estimates the gross domestic product could stray by around 1.5 percentage points on the short term from its estimated potential of 1% to 1.5%, which would translate in zero or negative economic growth in 2013.
“Without foreign investments and domestic savings, the outlook is not too bright,” Isarescu said. “You cannot have economic growth without investments.”
Romania’s gross domestic product increased 2.5% in 2011, but the growth is estimated to slow down to below 1% this year, due to a weak harvest and adverse developments in the euro area. For 2013, the authorities forecast a recovery to 2011 levels.
The official said Romania’s procyclical fiscal policy in the past five years has taken a toll on the economic growth, which was supposed to be countered by “massive inflows” of European funds.
“It is concerning that the EU fund absorption programs fail to materialize. Frankly, I believe that those funds have been vital for Romania’s economic development and they continue to be so,” Isarescu said.
“I don’t see many alternatives to attract foreign investments, perhaps only in the energy sector, in the Black Sea.”