Romania could fall into recession following the electoral cycle, economist warns

Romanian economy could fall into recession at the beginning of 2021, following the electoral cycle, due to unsustainable deficits, according to Ionut Dumitru, chief economist at Raiffeisen Bank Romania.

“We expect that by the end of 2020, the beginning of 2021, rather, the economy will perform worse and enter into recession. Of course, entering the recession also depends on the international context and how it will be reflected in the Romanian economy,” Dumitru said, cited by economica.net.

The economist forecasts that the Romanian economy will grow by 4 percent this year and by 3 percent in 2020, while the budget deficit will reach 3.6 percent of GDP this year due to surging spending on wages and pensions.

“In 2021, if the rate of pension growth set in the governance program is maintained, we will end up spending the whole income from taxes only on pensions and salaries, a situation impossible to manage for the budget and impossible to be accepted by the financial markets,” Dumitru warns.

This warning mirrors the widespread concerns among the local economists regarding the health of the current government policies in Romania.

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Three highly-reputed experts have sounded similar warnings that Romania is on the brink economically.