SAR foresees higher inflation, smaller economic growth

The budget deficit in 2007 has been estimated at 2.9 percent of the GDP by the SAR analysts and the economic growth at 6.3 percent, slightly under the official prognosis of 6.5 percent.
“After the favorable economic performance in 2006, analysts' estimates are more optimistic than those made last year,” stated the report.
Aside from a prognosis of macro-economic indicators, the report covered other issues, such as the local energy market, the distribution of European funds and the developments needed in the education system. SAR said its main concern was that government policies be adjusted to post-integration conditions. Another concern was the unequal regional development in Romania.
“This report is recommending that in the 2007-2013 budget cycle, Romanian authorities favor efficiency, rather than a mechanical understanding of what cohesion is – an even distribution of funds throughout the territory,” read the SAR document.
President Traian Basescu, present at the SAR conference, also stressed the risk that European funds will not be distributed properly. Another of the issues discussed by the Romanian NGO was energy. The gas and electricity sectors are generally in tune with European union regulations and international practices, concluded the society.
“The liberalization of our energy market is a remarkable success up to now, in spite of critics from poorly informed commentators: at present, Romania is the only state in the region to have a market for the upcoming day and a balancing market for electricity,” said the SAR, adding that the price of a kilowatt is among the lowest in Europe.
Regarding education and research in Romania, SAR said, “Institutional rules promote mediocrity and corruption, discouraging innovation and performance.”
The last section in the report spoke about ways to increase competition in Romania, which they described as “an economy largely based on production factors, that is just now starting to develop based on efficiency.”
On a more positive note, the SAR also spoke about the increase in wages that will come about with European integration. Analysts said salaries will gradually reach the level in Western Europe.
“The European Commission is estimating a strong growth in labor productivity in Romania in the next two years. Productivity and salary-wise, it is possible that the growth will be bigger than in most countries in the EU-27. However, if labor productivity per employee is exceeded by the compensation level, as the commission forecasts, the result will directly affect competitiveness,” reads the report.
“Romania's accession to the EU is a great achievement, but the morning after shows us its superficiality: only after we got in did we realize how much more there is to be done until the quality of life reaches the level in Western Europe,” said Alina Mungiu-Pippidi, the president of the society.

Ana-Maria David