Romania to register its best performance in terms of economic growth in Q1

2014-06-07 22:20:46 - From the Print Edition

Although Romania registered one of the slowest post-financial crisis recovery paces in Eastern Europe over the past few years, the first quarter of 2014 placed Romania on top of the list in terms of recovery, according to Guillermo Tolosa, International Monetary Fund (IMF) representative for Romania and Bulgaria. "Romania was not one of the countries that suffered most from the financial crisis in the region; however, it still recovered much less than the others," said Tolosa during an event organised in late May by the Internal Control Institute. "By 2013, Romania′s situation within Europe had improved; it was almost leading. Only Latvia did better. However, in the first quarter of 2014, Romania was the best performer of Eastern Europe." Nevertheless, according to the IMF representative, in order to see further growth, Romania needs to tackle several key strategic elements such as agriculture (representing six per cent of GDP), infrastructure, energy and absorption of EU funds. "The lack of absorption of EU funds is preventing Romania from booming as it should," said Tolosa. "Romania is the worst performer in the region in its capacity to absorb EU funds. As a comparison, this is the key element in the success story of Poland. In the middle of the crisis, where nobody was investing, they managed to invest a very large amount of money into the economy, allowing them to grow." Another element that hinders the proper development of the local economy is the fact that almost all sectors depend on state-owned enterprises which are not doing a good job, according to Tolosa. In energy and gas, state-owned companies represent 56 per cent of the activity, while in transport – 30 per cent, water supply – 30 per cent, mining – 25 per cent and agriculture – 15 per cent. "The larger the presence of the state-owned enterprises, the worse the performance of the sector," added IMF's Tolosa.