With an economic growth of 1.6% in the first quarter compared with the four quarter of 2015, Romania leaves the other EU countries and especially those in Eastern Europe behind, where the growth rate slowed down because of the dwindling supply of EU funds available. Cyprus posted the second highest growth rate, 0.9%, followed by Spain, 0.8%. First quarter 2016 to first quarter 2015 growth stood a 4.3%. The Gross Domestic Product increased by 3.7% in 2015.
“The acceleration of the economic growth is a direct effect of the pro-cyclical policies that come up every time before the elections. It is not good because afterwards we will have forcedly anti-cyclical policies,” says Eugen Radulescu, director of the Financial Stability Department of Romania’s central bank.
“Romania having the highest growth rate in Europe does not mean much to me. It is a forced growth; we can already see foreign deficit on the rise.”
Romania’s economic growth accelerated in the first quarter more than estimated as tax cuts and wage increases buoyed consumers, Bloomberg writes. The European Commission predicts GDP will expand at the second-fastest pace in the EU in 2016, behind Ireland.
“Tax cuts and wage raises drove up demand, but our lack of adequate supply shows in the increase in imports. This is starting to look like the 2008 situation. These pro-cyclical policies should be limited,” Eugen Radulescu added.
(English version by Loredana Fratila-Cristescu)