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Romania 2007. Macroeconomic Instability is Back?

Author

Listed:
  • Cristian Socol

    (Ministry of Economy and Finance)

  • Dorin Emil Mantescu

    (Ministry of Economy and Finance)

Abstract

After several years of perseverant implementation, the reform policies we have been pursuing have led to significant and identifiable results. Romania’s economy has continued to perform strongly, although growth is expected to moderate to 6 percent in 2007 on account of prolonged drought effects on agricultural production. Taking into account the annual inflation rate increasing to 6.03 percent (mainly due to a steep increase in food prices and an adverse impact of recent turbulences on world financial markets), National Bank of Romania (NBR) revised the inflation target by 0.7 pp to 5.7% for current year. The general government recorded a small cash surplus during the first nine months of 2007 (0.19% of GDP), largely on account of slow execution of the capital budget. Regarding the economy’s external situation, the already large current account deficit has continued to widen. In 2007, the current account deficit is possible to attain about 14 percent of GDP, with a similarly high level projected for 2008. There are mixed results, which show there are strong risks of macroeconomic instability in the short and medium term, threaths which have analysed in this paper.

Suggested Citation

  • Cristian Socol & Dorin Emil Mantescu, 2007. "Romania 2007. Macroeconomic Instability is Back?," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 11(11(516)(s), pages 103-112, November.
    • Handle: RePEc:agr:journl:v:11(516)(supplement):y:2007:i:11(516)(supplement):p:103-112
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