Isarescu’s warning: Romania’s buoyant economic growth risks setting the stage for a hard landing in the absence of structural reforms

Sorin Melenciuc 20/07/2018 | 10:15

Romania’s buoyant economic growth risks setting the stage for a hard landing in the absence of structural reforms and fiscal consolidation, National Bank of Romania (BNR) governor Mugur Isarescu said to young diplomats, warning that macroeconomic stability is not properly valued until it is lost.

The governor has presented his views in its report “Macroeconomic stability – a stepstone towards security and diplomatic standing. Recent developments in Romania”, released by the central bank.

“In the absence of structural reforms and fiscal consolidation, Romaniaʼs buoyant economic growth risks setting the stage for a hard landing,” Isarescu said.

The governor has emphasized the role of macroeconomic stability achieved in Romania during the last decade and has warned on risks related to instability.

“Currency and banking crises (whatever their trigger) – particularly against the background of high debt burden and when overlapping weak institutions – lead to capital flight (both financial and human), increased poverty and marginalisation, and mounting social tension insecurity,” Isarescu said.

According to the governor, macroeconomic stability “enhances the country’s position in the diplomatic arena”, but at the same time it can greatly benefit from domestic and international networking that would smooth the flows of trade, ideas and factors.

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