Adrian Mitroi: Private consumption is not economic activity generating productivity

Photo credit: (c) Alex MICSIK / AGERPRES PHOTO

Private consumption is not an economic activity generating productivity, competitiveness and standard of living, Academy of Economic Studies (ASE) Professor of Behavioural Investment and Finance Adrian Mitroi told AGERPRES.

Photo credit: (c) Alex MICSIK / AGERPRES PHOTO

"As consistent it may seem in the GDP, private consumption is not an economic activity generating productivity, competitiveness and standard of living. For now, Romania can have a sustainable growth mainly based on the domestic consumption combined with the export of industrial output. A stable exchange rate, mainly in front of the dollar (which tends to grow), low interest rates and a tight deficit bring consistency for economic growth, but without investments we won't have a sufficient and convergent growth," Mitroi said.

He pointed out that "the 'four-wheel drive' in economy essentially depends on investments and private companies know best how to invest and create well-paid jobs."

"The increase in the domestic consumption is directly correlated with the economic growth. The saving trend in partially inhibited by the low interest rates and the capital allotment to risky procurements is slowed down by the volatility of stock market quotations, including of derivative goods and instruments. The cheap funding helps the increase in economic confidence, which can represent an inflection point in resuming investments and gross capital forming. For start, the state must assume this responsibility. Meanwhile, the private capital will want to take loans for investments, mainly loans without foreign exchange risk involved," the ASE Professor explained.

According to him, the following economic cycle will be more inclusive and with a wider dispersion of revenues among...

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