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PM Bolojan: Economic slowdown is a reality until next summer
Economic slowdown in Romania is a reality at least until the summer of 2026, Prime Minister Ilie Bolojan said on Monday, adding that he does not believe inflation will reach double digits.
"We cannot go below such a figure [8% deficit] because it is not sustainable. This government is in its second semester in office, and the measures that have been passed have an impact on the last four months and it is impossible to come up with measures that correct accumulations of 12 months in four months," Bolojan told TVR Info public broadcaster when asked if Romania has overcome the danger of inability to pay or recession.
According to the prime minister, economic downturn is a reality.
He explained that this is the consequence of the external and internal context.
"On the one hand, we have a European context that is not likely to sustain us, we have a slowdown in the European economy, we have a resettlement of global supply chains, we have these disputes related to tariffs, trade barriers, which are likely to slow down the European economy. We have an economy that is linked, through our economic structures, to what is happening in Europe. If Europe does very well, it has a ripple effect on us. If the European economy slows down, it inevitably acts as a ballast for us as well. So, this context does not help us. Then there is the domestic context. When, in one form or another, you increase the Value Added Tax by one percent, by two percent, inevitably some prices will probably increase. Or, if they don't increase, those additional costs are internalised by companies. When you cap salaries, cut bonuses, again, in one form or another, you put less money into the market, you decrease the purchasing power globally and that has some economic slowdown effects," Bolojan said.
He added that, "at least until the summer of next year,"Romania will be "in a situation of slowing economic growth."
Bolojan also said that, after this period of corrections, there will be a period of economic growth.
"After passing through this period of corrections, we will be in a period of economic growth again. Inflation, indeed, has increased, but I don't think it will reach double digits (...), and all the estimates, both of the National Bank of Romania and of specialists, indicate a decrease in the second half of next year greater than the one estimated before these measures."
The PM added that it is necessary to maintain a rhythm of controlling expenses, staggering investments and collecting revenues.
"As far as the inability to pay is concerned, we are in the situation where we have passed several stages of evaluations, we have to maintain a rhythm in which to control our expenses, to stagger our investments and to collect the revenues that have been established. That means responsibility in governance, it means following a path, and political stability and solidarity among partners give a perspective that, in the medium term, one year, two, three years, things in Romania are going in a good direction."
He also said that "when factors of political instability appear or things happen that no longer give the guarantee of a predictable behaviour in the governmental action, then obviously the perspective of confidence is low."
"A prospect of default, if we comply with these rules, from my point of view, is excluded. But if we only increase certain taxes without reducing expenses, if we are not more efficient in general, if we do not perform in the act of administration, whether it is the administration of state institutions, whether it is the administration of state companies, it is only a matter of time before these revenues that we collect additionally will be eaten by inefficiency, structural expenditures that are not modified and that is why we have to go down this path," Bolojan said.