Traian Basescu: Worse is that exports diminished massively
‘The worse part is that our exports massively diminished, it deals with Romania’s exports to Germany, France, the UK, Spain, all these countries having been strongly hit by the economic crisis, and as a result, these countries reduced the number of their orders to the Romanian industry and the result was a drop in its production and the rise in the unemployment.
On the other hand, the decrease in the GDP is also caused by the dramatic decrease in the imports, and this is the positive side,’ Basescu said, when asked what exactly overturned the International Monetary Fund (IMF) expectations related to Romania’s economic growth.
While Romania’s current account deficit (representing the difference between the imports and the exports -editor’s note) stood at 7.6 billion euros, in end May, 2008, this year’s figure was 1.7 billion euros in the first five months of the year, President Basescu also stressed.
‘This means we have already reached a sustainable deficit by the direct foreign investments.
I hope the trend will keep up and experts expect Romania to end the year at a current account deficit ranging between 5 and 6 percent, an extraordinary adjustment compared to 13.5 percent of the GDP, last year.
And we come now to a simple theory and I apologize to the economists for my economic assessments, I know this makes them mad (…) we are invalidating the fib the former government used to tell, namely that we give the money to boost the consumption.
This is what the economic growth based on consumption means,’ President Basescu said. When the consumption drops, the economic growth collapses, Traian Basescu pointed out.
‘It is here that we must learn a lesson, and I hope the incumbent government takes into account, and it has taken steps in the respect, and takes into account the reality that a thorough economic growth relies on investments, above all.
If the investments had been prevalent compared to the economic growth that the consumption generates, Romania would have got a smaller shock,’ Basescu stressed.
According to him, what is going on in Romania should be seen, at least in the European context, the more that there are many states which have been experiencing much worse economic downturns and with much stronger social effects than our country.
‘Therefore, from this point of view, I would draw a certain conclusion, our current account deficit no longer stands at 7.6 billion for the first five months of the year.
This means a lower debt. Because the money should have been paid.
We’ll have to pay a smaller current account deficit. (…) It is 5 billion euros less to be paid, one way or anther. Thus, we come closer to a balance between exports and imports,’ Basescu specified.