Romanian Vulnerabilities in the Current Financial and Economic Crises Context

The current global economic crisis was ignited in the financial markets of the major developed economies but soon the real economy was affected. The developing world, Romania in particular, has not been isolated from its impact. International trade and capital flows serve as a transmission mechanism that illustrated that the hypothesis of a de-coupling between the developed and developing world does not hold. Romanian economy mostly does not have fully developed financial systems and is less integrated into the global financial market, hence the initial expectation in some circles that our national economy would be isolated from the contagion of the crisis. This paper argues that this was an unrealistic presumption and that the disease had a serious fall-out in Romania. Consumer spending was cut back, investment plans were cancelled and stock levels were run down. The economic situation is serious. GDP has shrunk, the unemployment level is rising, investments are still slowing, lending is tight and budget deficits are growing fast. Fiscal policies implemented by our country are subordinated to our lack of necessary funding and access to. However, that generated a monopoly on this sector of the IMF. Also, a social crisis became imminent.