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Vasilescu (BNR): Economic growth in first quarter is rather in quantity than quality
Economic growth in Romania in the first quarter of the year is rather in quantity than quality, said Adrian Vasilescu, the councillor of BNR governor, on Tuesday.
The first data published on Tuesday by the National Statistics Institute (INS) show that Romanian economy grew by 5.7% in the first quarter, compared to the same period of 2016 and by 1.7% compared to the previous quarter.
The growth rate exceeds analysts’ prognoses, average estimates being of 4.5% against the same period of last year and 1% against the previous quarter.
The BNR councillor points out that economic advance is hiding a lack of performance in economy.
“First of all, it is an economic growth in quantity, not quality, because we could not have an excess of technology in Romania which should change product quality. Practically, in the capital-labour ratio, which is very important when we talk about a country’s economy or about a country’s development. In that ratio we see that fixed capital has a still unsatisfactory contribution to the increase of GDP. In exchange, consumption is very important in Romania. Consumption grows and consumption participation to GDP is relevant,” Vasilescu said on radio RFI.
He also pointed out that economic advance exceeded the potential increase rate of GDP and it is possible that the rate in the first quarter would not maintain until the end of the year, as it happened in 2016, when economy had 6% advance in quarter 1, but finished the year with 4.8% increase.
“It is too early to say, I think. A rate drop in the next quarters is possible. 5.7 could be a good result over potential GDP, that is over the normal possibility of Romanian economy to create GDP,” Vasilescu added.
The economists consulted by News.ro consider that economic advance remains dependant on a single engine: consumption.
"We do not know details on increase, but we suspect it was generated first of all by consumption. You cannot have sustainable growth based on consumption on a long run,” Ionut Dumitru, the president of the Fiscal Council declared for News.ro.