All data indicates that Romania's economy is overheated and its economic growth pattern stretched to the limits, Romania's National Bank (BNR) chief economist Valentin Lazea said in a HotNews.ro-BBC interview. He said that Romania's economic growth rate was based upon an unsustainable pattern unlike other European countries like Slovakia, the Czech Republic or Hungary were the economic growth was based less upon consumption and more on exports.
According to Lazea, it is unlikely, though, that the national currency depreciation will reach 4 Romanian lei (RON) per euro as it is a trend kept under control by the central bank. He said there was a possibility that BNR will increase its key rate at its next session as such a move would calm down those who fear a continuing depreciation.
Lazea added that Romania consumed more than it produced and the Government already engaged in too high budgetary spendings. Thus, Lazea argued that Romania's currency depreciation was sparked by a series of factors among which the international effect of the American subprime crisis.
Lazea puts forward the idea that Romania's economic growth is based upon unsustainable measures with a very high deficit amounting to 14% of GDP, an explosive growth since 2006 when the deficit registered 8% of GDP. Romanians therefore consume more than they produce.
Domestic blame needs to be spread among various actors within the country, Lazea argues. Among governmental measures, foreign investors carry a part of the blame due to their appetite for high market space. Moreover, another important actor on Romania's economic stage are banks that started to push more and more credits yearly. Lazea puts forward the governmental credit that rose by some 55%.
When it comes to the government and its responsibility, Lazea says that it allowed budgetary salaries above than labor productivity. Thus, the economy cannot support too much such imbalances. Moreover, he admits that the government has finally realized that it needs to put an end to high spending.
Lazea argues that if Romania will not recover slowly, the 2014 target set to join the euro zone will be postponed. However, he assures that Romania's National Bank will do what it takes to fulfill its set target. Concerning a forecast regarding Romania's recovery Lazea said that it is very possible that in three months' time to assess whether the US economy will fall into a recession or not and whether Europe's economic crisis will deepen.