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PwC: Romania's economy saw significant boost since 2000
Romania's economic evolution considered retrospectively on long term shows a significant rise compared to the year 2000, but this is no guarantee of avoiding a per capita 'middle income trap' in the near future, according to an analysis by the consulting company PwC.
'If we look at Romania's economic evolution on longer term, we note a remarkable rise compared to 2000. This is, however, no guarantee of our country's avoiding the per capita middle income trap, and smoothly advancing towards developed economies. A national project is necessary to support the country's re-industrialization, attracting foreign investments and consolidating domestic capital, to win the modernization game,' asserted PwC Romania Country Managing Partner Vasile Iuga in a release.
Despite the global financial crisis, most emerging markets have continued their progress compared to 2007, trying to avoid the 'middle income trap', according to PwC's new ESCAPE index, which places Romania 37th in 2000, then saw it climb 13 positions to 24th in 2012.
The 'middle income trap' occurs when a country's growth plateaus and eventually stagnates after reaching per capita middle income levels.
Among Central and Eastern European countries Poland, Romania, and Russia have significantly improved their ranking in PwC's Escape index since 2000. From the beginning of the financial crisis in 2007, developed economies except Australia witnessed an overall decline of their positions in this index. According to PwC's report, many North European countries had constantly good performances, including Sweden (No. 1), Switzerland (No. 2), the Netherlands (No. 4), Finland (No. 5), and Denmark (No. 6).
Outside Europe, Singapore ranks close to the top (No. 3), while Australia has advanced from 13th in 2000 to 7th in 2012. Malaysia also has a good record, climbing from 17th position in 2007 to 14th in 2012. The report shows that between 2007 and 2012, the United States and Great Britain went down the ladder of developed markets. The steepest declines were noted since 2007 for the economies badly hit by the crisis in the euro area - Italy, Spain, Portugal, and Greece. Following these changes, Greece has exited the top 30. None of the countries in the MINT group (Mexico, Indonesia, Nigeria and Turkey) succeeded in entering the top 30, although all of them have an upward track since 2000, PwC analysis found.
'Previously dynamic emerging economies like India, Brazil and Turkey lately experienced troubles, and must continue their structural reforms. Economic growth is necessary, but not sufficient for a society's development. The governments and the investors must take into account a wider range of development indicators, gauged by the ESCAPE index,' Vasile Iuga explained.
PwC's new escape index is an instrument for integrated evaluation of a country's performances and progress in time. It analyzes five relevant dimensions for avoiding the 'middle income trap' for emerging economies, or for averting a stagnation of the highly developed economies after the financial crisis.