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The tobacco sector could contribute by 2.56% to the GDP annually

The tobacco sector could bring to the Romanian economy 5.7 billion euro, annually, which would contribute 2.56% to the GDP,shows a scenario taken into consideration by the Association for Studies and Economic-Social Estimates (ASPES) in a specialty research, published on Monday.

‘The optimistic scenario relies on the hypothesis of economic growth at the level of Romania’s potential, as well as revision of the hostile way in which the industries considered as unwanted, including tobacco sector are seen. In this scenario, smuggling is at the average level in the EU, almost 10%. On the basis of these variables, the turnover of the sector is increased by 8%, and in the adjoining domains by 9-12%. This development brings to the GDP a plus of 2.16 billion euro per year, which would contribute from almost 3.6 billion euro ( the level of 2019) to over 5.7 billion euro annually, corresponding to a percentage of 2.56% to GDP ( a plus of 0.96% per year)’ the study says.

According to the quoted source, in case of a scenario of accentuated decrease, which relies on the hypothesis of recession at the level of the EU  and implicitly, in Romania, together with the intensification of  restrictions and barriers on the market for the tobacco sector, smuggling with cigarettes would grow by ten percentage points, against an average level of 16 percentage points.

Thus, in this case, an abrupt drop of 18% for the turnover of the industry is estimated as well as a reduction of the turnover in the adjoining domains between 12% and 7% and the GDP loss would be of 1.46 billion euro/year. The contribution of the sector would diminish at only 2.1 billion euro, the equivalent of almost 0.95% of GDP against the contribution of the sector in 2019, 1.6% of GDP (3.6 billion euro) respectively.

‘In the scenario of moderate growth, the turnover of the sector grows by only 3% and the adjoining domains by 3-5 %. Smuggling is situated at an average level of 16%. As such, the sector would offer to the budget approximately 4.6 billion euro annually and would have a share in the GDP of 2.04%’ the research says.

According to ASPES, which quotes the ministry of finances up to 80% of the turnover of the industry represents sums given to the state budget, namely almost 3.6 billion euro, in 2019, while the sums given in 2020 were 10.9% higher than in the previous year.

Romania is the third European producer of cigarettes, after Germany and Poland with a contribution of the sector to the GDP of 1.6% in 2019.

The ASPES research relies on data of the public institutions, made with the help of JTI.