RSS
FinMin Dragu: Over-potential economic growth is the most dangerous because it could lead us to consume more than we produce
The over-potential economic growth is the most dangerous because it could lead us to imbalances, considering that in such circumstances we consume more than we produce, on Tuesday said the Public Finances Minister, Anca Dragu in a meeting of the Committee for European Affairs with the Chamber of Deputies.
"Perhaps, practically an economy might not combine these factors (of economic growth - author's note) in an optimum way, and then the increase is below or over potential. The over-potential growth is the most dangerous, because it means that we consume more than we produce. Romania currently experiences an offers deficit, and the under implementation, and reforms drawn up and currently being enforced by the authorities are able to cut this offers deficit. These reforms lead to the economy's potential growth," the Finance minister explained.
She recalled that Romania has encountered such problems in the pre-crisis period, and now it is important that the authorities focus on the necessary structural reforms to increase the Romanian economy's potential.
"We now witness an enviable growth, yet we should be careful to these challenges, to focus the economic growth onto increasing investments and exports and somehow consumption, which shares a high level already, should not grow too much. This situation with consumption overlapping production leads to imbalance," added Anca Dragu.
According to her, if otherwise, Romania is once again risking a cyclical, contextual growth, which at some point would halt.
The Finance Minister also said that the authorities' discipline has also an effect of example to the markets, because unruly authorities do nothing but confuse the markets and might give birth to an unwanted reaction.
The National Prognosis Commission (CNP) has revised upward to 4.2pct its projection regarding the advance of the Gross Domestic Product (GDP) for 2016 and its estimation for 2015 to 3.7pct, according to the Winter Prognosis 2016 released on Monday.
The domestic demand will score an advance of 4.8pct in 2016, as against 4.6pct in 2015, while for 2017 a 4.8pct growth is estimated. The gross formation of fixed capital (investments) is forecast to grow by 6.4pct in 2016 and by 6.6pct in 2017, beyond the estimates of November 2015.