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UN: Romanian economy to grow by 5.5 pc in 2008

The country ranks 68th in the annual economic freedom of the world report

Romania will register an economic growth of 5.5 per cent this year, a percentage point below the level aimed for by the authorities, and an inflation rate of 5.8 per cent, a UN study on economic prospects for 2008 points out, quoted by The Money Channel. The UN report estimates an economic growth that is one per cent lower than the one included in the information published by the National Prognosis Commission. And that is so because of the crisis in international markets, influenced by the credit situation in the United States. Regarding this year’s inflation rate in Romania, UN experts believe it will range around 5.8 per cent, while the Romanian National Bank has established an inflation rate of only 3.8 per cent for 2008. On the other hand, although the investment climate and the monetary market have received favourable notes, Romania has fallen one rank this year and is now ranking 68th in the annual Economic Freedom of the World report authored by the Heritage Foundation and Wall Street Journal, Mediafax informs. The report was based on the economic freedom index of 157 countries and it weighs the degree of freedom within several economic sectors, such as trade, business environment, investments or ownership rights. According to the report, Romania has a freedom index of 61.5 per cent, 0.2 per cent more than the figure it registered in 2007. Starting a business in Romania takes an average of 14 days At European level, Romania ranks 30th out of 41 countries and falls below the regional average based on the scores obtained. The authors of the report reiterate that the income tax and profit tax have a level of 16 per cent. They also point out that the total tax revenues have a high share in GDP. The positive macroeconomic evolutions have stimulated the growth of the middle class and have contributed to the reduction of the poverty rate. The investment level remains high following the accession to the EU, so new and modern plants are inaugurated, investment projects are launched in the public sector and foreign direct investments maintain a fast-paced rhythm. Specialists within the Heritage Foundation have separately analyzed the freedom degree in the different sectors of the economy and have reached the conclusion that it takes around 14 days in order to start a business in Romania, in contrast to a 43-day world average. Thus, Romania scored 74.1 per cent in what concerns the freedom index in the business environment. On the other hand, closing down a company could be a difficult process. WB: Romania, one of the emerging states with vulnerable economy Weaknesses of the Romanian economy are most substantial than those of other emerging countries, one of the reasons being the high current account deficit, World Bank lead economist Hans Timmer told a press conference yesterday. “We see a number of warning signals in the macro-economy. Within a short period of time, the current account deficit has significantly deepened,” Timmer said, quoted by Mediafax. Timmer pointed out that, while stock exchange indices in other emerging states have improved, in Romania they tend to stagnate. “There’s no reason to panic, but these things indicate that the situation is not sustainable,” Timmer explained. Shortcomings of the Romanian economy also include the increase in consumer prices and the financing of the current account deficit, Timmer believes. According to World Bank economists, Romania’s economic growth will slow down this year to 5.9 per cent, below the level forecast by Romanian authorities, as against the 6.1 per cent rate estimated for 2007. Sursa: www.nineoclock.ro

Tags: romania level timmer report world economy economic freedom romanian

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