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Morgan Stanley Analysis: How much could Romania’s economy be affected by Schengen area suspension?
Romania ranks 15th in a top of the economic impact of Schengen suspension, which classifies 27 EU states without Great Britain, according to how much intra-community trade, transports and tourism could be affected by the interruption of free circulation.
The Schengen suspension would undermine the functioning of the single market, economic impact being most powerful in Central and Eastern Europe, Baltic Countries, Belgium, the Netherlands and Luxembourg, according to a research note by Morgan Stanley analysts, quoted by the Hungarian daily Portfolio.
The strongest negative effects will be felt by Romania in the area of commercial exchanges and air traffic, while difficulties recorded by intra-community tourism would affect Romania less than other states, as a result of the low GDP share of this sector and the small number of foreign tourists.
Hungary would have the most to lose in case border control is reintroduced, because of the high commercial integration with the rest of EU. Croatia would rank second, followed by Estonia, Slovenia, Luxembourg, Slovakia, Portugal, Malta, Bulgaria and the Czech Republic.
Romania ranks after Latvia and Belgium and is followed by Spain and Greece. The lowest impact will be felt by Sweden, France, Germany and Denmark.
The unprecedented refugees flow endangers free circulation without customs control in the Schengen area, according to analysts of the American bank.
The main risk associated to Schengen suspension would be the reduction of commercial exchanges among European countries. The impact on bilateral exchanges in EU could be 10-20% in case of Schengen suspension.
Besides economic impact, the reintroduction of border control may have long term political consequences, undermining population support for the continuation of the European integration process.
Romania is not a member of the Schengen area made of 22 EU states and the four states of the Free Exchange European Association (Iceland, Liechtenstein, Norway and Switzerland). Besides Romania, the non-Schengen EU countries are Bulgaria, Cyprus, Croatia, Great Britain and Ireland.