Romania's Fast Growth Comes With Risks, Experts Warn

Romania's economy grew at record rates in 2017 due to an increase in consumption since fiscal relaxation.

But some analysts warn that while fast growth looks like good news, the government is neglecting investment and the country is bound to face difficulties in the future.

Romania's GDP rocketed in 2017, according to data released by the National Statistics Institute on Wednesday.

The economy grew by 7 per cent compared to 2016, which is the greatest increase the country has seen since 2008. In 2016, it grew by 4.8 per cent, while in 2015 it went up by 3.9 per cent.

Romania ranked sixthin the world in 2017 in growth terms, together with Djibouti and Laos, and it did better than China, whose economy grew by 6.5 per cent, according to the World Bank. 

However, experts say the growth was largely stimulated by wage rises in the public sector and by a fiscal relaxation adopted by the left-wing Social Democratic government last year.

These policies have stimulated consumption and economic growth, but have also generated bigger external deficits.

According to some experts and opposition politicians, Romania is paradoxically heading towards an economic crisis and an increasingly state-controlled economy.  

"All the indicators that already revealed a fragile, ill economy have gotten worse," economist and Liberal MP Florin Citu wrote on Wednesday on Facebook.

"Inflation, trade deficit, budget deficit, public debt, the percentage of fiscal income used for unproductive expenses, the percentage of GDP spent on investments [private and public]," he added.

Data published on Tuesday by Romania's Central Bank say Romania's external debt has grown to almost 6.5 billion euros, 85 per cent higher than in 2016.

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