Raiffeisen Bank Chief Economist and former Fiscal Council Chairman Ionuc Dumitru said Romania has fuel for economic growth, but clarified that the problem is that we have very large deficits that financial markets will not tolerate indefinitely.

Ionuc Dumitru said on Thursday at the News.ro – Romania’s Macroeconomic and Fiscal Outlook for 2024 event that there is no question of a recession in Romania in the context of retail sales growth.

“Once there was talk of a recession here. We must know the conditions. What kind of recession are we talking about in Romania when in January, the data was released yesterday, retail sales were up 3.8% in January in real terms, yes that’s real growth, compared to December seasonally adjusted. This is a huge increase in retail sales. Your incomes are increasing, salaries are currently increasing by 15% on average in both the public and private sectors. How can you talk about a recession in this context? Last year we had economic growth, indeed, lower than in previous years, but still one of the biggest in Europe or one of the best in the region we are in,” said Ionuc Dumitru.

He explained that the problem is that Romania has a very large deficit that the financial markets will not tolerate indefinitely.

“The problem is that the name of the conference is Macroeconomic Perspectives.” That is, we now have fuel for economic growth. The problem is that we have very large deficits that we live with and that financial markets will not tolerate indefinitely. Actually, this is the problem. And if we look at the elephant in the room, fiscal policy and the fiscal stance, probably nobody is talking about this in the run-up to an election, and we’d be naive to think that we have a topic for debate during the election period about how we do fiscal adjustment . This will not happen. The problem is that after the elections we will definitely have to face this problem,” explained Ionuts Dumitru.

He explained that he thought it was incredibly naive that we could reduce the deficit in seven years. “It seems to me to be infinitely naive to think that we can reduce the budget deficit over a seven-year horizon. why Because the financial markets can’t stand you. Now our national debt is 50% of GDP. Indeed, among the smallest in Europe. We are not quite at the bottom of the ranking, but it is not high compared to the European average. But at the same time, we have the smallest financial intermediation in Europe. Let’s not forget that the main financier of the state is the financial sector. Our financial sector is about four to five times smaller than the European average. Or our public debt is not four or five times lower than the European average, it is about half of the European average,” said the chief economist of Raiffeisen Bank.