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FinMin Citu: We estimate an economic contraction of 4%, even higher; recovery speed counts
Economic contraction could slightly exceed 4% this year and the recovery speed is important now. That is why the government invested very much to substitute the drop of private demand through investments from the budget, said Florin Citu, the minister of public finance on Thursday, at “Banking Forum Online”, organized by Financial Intelligence.
“I think we have eliminated the most pessimistic scenarios. We estimate an economic contraction of almost 4% and it could be even higher. I don;t see a disaster here because we are talking about 2020 when everybody knows there will be an economic contraction at global level. The one I see is about the recovery speed in 2021. Therefore 2020 is closed. There is nothing we can do since we closed the economy for two months. At that moment I said it would be difficult for 2020. The recovery speed counts very much. Hence the risk and it is up to us. That is why the government has invested very much this year. We had to substitute the drop of private demand through investments from the budget. That is why after 9 months we have invested 30 billion lei in economy. 7 billion lei more than in the same period of last year. It is the largest amount invested in the last ten years and more than it was invested in 2016 and 2017, for instance. Therefore the key is to have the force to maintain investments. This year we we still have 20 billion lei to invest for 2020, so we could steal the start in 2021 somehow, “ said Florin Citu.
He mentioned that the target is that 2021 could cancel the economic drop of 2020.
“Let's suppose that we have a 4% drop in 2020. I would like 2021 to have at least a 4% increase, so that nothing should be lost because it is important how we build the following period,” Citu also declared.
According to the latest World Bank estimates, Romanian economy will contract by 5.7% in 2020, but we register a 4.9% relaunch in 2021.