News 20111121 economy


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News 20111121 economy

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News 20111121 economy

  1. 1. News November 17th, 2011 The 30 best news in the Romanian economy Romania calms the storm that is announced in Europe because it has done homework in advance. "Many investors realize that there are countries in Central and Eastern Europe, including Romania, who have passed the most difficult times and provide an interesting economic framework", said the economic analyst Aurelian Dochia. Macro-economic stability of Romania gained lately, differentiates it from other countries for which only now beginning brunt such as Italy, Spain or Hungary, he considers. Unemployment is lower than in other European countries, lower level of debt, austerity measures since last year and the start of major investment projects allow Romania to breathe a little easier in the 3rd year of crisis. In total, currently, local economy offers over 30 good news. We are back into the investors list According Dochia, because the Romanian economy has undergone a dramatic adjustment in the first part of the crisis and has taken tough austerity, evolving normal European economy should only take up. The first sign that Romania’s economy is showing signs of recovery was given by rating agency Fitch, which in summer has given Romania a better note, recommending so investors to place money in it. This means that Romania managed to convince the evaluators that this anemic economic growth is strong and healthy. In the week it was announced better than expected economic growth for Romania in the 3rd quarter of this year, respectively 1.9% compared with during April-June, the RON reached its lowest level against the euro this year.Eng. Paul Keisch Page 1
  2. 2. News November 17th, 2011 The RON resists crisis Analysts say, before we put ashes on the head should look into the neighbor’s yard and see that Romania is in a much better situation than its sisters both Eastern and Western. "In Hungary only now is the worst of the crisis. The Forint depreciated more than the RON (12% compared with 2- 3%). We are seen something better than Hungary, and even than Italy", explained Dochia. Analysts put RON depreciation on the uncertainties of the old continent, at Budapests announcement by the government led by Viktor Orban on an agreement with the International Monetary Fund (IMF) and information on reducing exposure of Western banks on Eastern Europe. The challenges of the next period We have plenty of challenges that we have to face in the near future: the reform of state companies to increase of EU funds absorption from 3.72% currently to 20% at the end of next year and to attract investment, according to state councilor Andreea Paul-Vass. In turn, Dochia says that despite promising developments, Romania cannot be disconnected from the region and Europe. "The whole fate of Romanian economy depends on the old continent. We cannot grow by relying only on ourselves and domestic consumption. If things go wrong in Europe, we cannot escape," said the economic analyst. MACROECONOMIC Largest growth in the coming crisis Supported by agriculture and industry Romanian economy has recorded in July-September, the best development of the crisis onset, i.e. the end of 2008, while other European countries or marked time, or were passed on down, like Cyprus, the Netherlands and Portugal. According to the National Statistics Institute (INS), Gross Domestic Product (PIB) grew in the 3rd quarter by 1.9% compared with the previous quarter. In the first 3 months of the year, quarterly growth was 0.7%, and in the 2nd quarter the economy rose by 0.2%. In total, the first nine months of 2011, the economy experienced a 2.6% increase over the same period last year.Eng. Paul Keisch Page 2
  3. 3. News November 17th, 2011 However, the figures speak for the Romanian economy and when we refer to the debt of only 31% of GDP, while the European average is 80.2% of GDP. 23 of the 27 EU states have a high debt higher than Romania’s, among them being the states of PIGS (Portugal, Italy, Greece and Spain) and Germany, Austria, Poland and Finland, countries with strong and performing economy. And in terms of budget deficit recorded in the last year of 6.9% of GDP, Romania stand better than 10 other European countries and nine months we are on track to maintain the deficit target of 4.4% of GDP. INFRASTRUCTURE Investment in highway construction Currently Romania has open sites for construction of approximately 433 kilometers of highway, and the next period will sign contracts for the construction of about other 100, according to authorities. Anca Boagiu, Minister of Transport, said recently that, not later than spring of 2013, Romanian people will travel on highway from Nădlac to Sibiu, part of Pan-European Corridor IV. The most advanced section of Arad and Timişoara is to be open to traffic in December, where work is almost completed. Next year will be ready also Bucharest-Ploieşti highway that will take on DN1 infernal traffic. "No later than next spring, the entire Bucharest-Ploieşti highway will be given in use. Basically, it is ready in December, except for a very important bridge, which, unfortunately, cannot be completed. Otherwise, its ready", said recently, Prime Minister Emil Boc. According to Romanian officials, in 2013 Romanians will travel on about 800 kilometers of highway. Currently, in Romania can travel 334 kilometers on the highway.Eng. Paul Keisch Page 3
  4. 4. News November 17th, 2011 MONEY Government increased funding for investments. Business analysts are calling for a priority list Funds allocated from state budget for investment have increased in recent years, reaching to represent about 5.5% of GDP. In the EU, only Poland allocates more money for investment as a percentage of GDP. Budgetary allocations for this purpose have reached to €8 Billion in 2011. This money went into 25 major projects which resulted in the creation of more than 7,000 jobs. The government also paid state aid worth about €110 Million to support investors wishing to place their money in Romania and employ people from 50 upwards. Many companies have benefited from State support: Italians of Pirelli that have decided to expand their plant in Slatina, French of Renault and Americans of Honeywell etc. Lucian Anghel, chief economist of Romanian Commercial Bank (BCR), said recently, it is important for Romania to invest and to support investment, but it is good to have a list of priorities, because "now there are over 40,000 public works investment plan that cannot all be brought to an end". There are, however, also analysts who see with severely eyes the increase public spending, whether for investment, suggesting that for this purpose to use European money. How attractive is Romania for investors According to Andreea Paul-Vass, despite the fact that Finns from Nokia have decided to close plant from Jucu and dismissal of the approximately 2,000 employees, Romania remains attractive to global relocation services, being ranked 25 out of 50 in a ranking conducted by consulting firm AT Kearney. Among the countries in the region, Romania is placed better than Hungary (31st place), Czech Republic (35th place), Slovakia (40th place). LABOUR MARKET We have fewer unemployed than other Europeans Even in September, the unemployment rate increased compared to the previous month, reaching 7.5%, according to Eurostat, Romania is among the EU countries with a small number of unemployed. Spain, Greece and Latvia recorded the highest rates of unemployment, 22.6%, 17.6% and 16.1% respectively. According to Eurostat in Spain, in September, 48% of young people didn’t have a job. According to state councilor Andreea Paul-Vass, Romania registered in September unemployment rate by 2.2 percentage points below the European average. According to official, effects began to appear already coming into force of the new Labor Code. From May to November 6th, the number of registered employment contracts increased by 1,192,493 of which 66% are permanent. Of these, 773,896 are active contracts. Analyzing the period 2007–2010, we see that GDP/capita expressed in purchasing power parity in Romania increased from €10,400 in Romanias accession year to the EU, 2007, to €11,000 last year, while in the European average it fell in this period from €25,000 to €24,400. Both in Romania and in Bulgaria, this indicator was, at the end of last year 55% of EU average.Eng. Paul Keisch Page 4
  5. 5. News November 17th, 2011 Our budget revenues get increased Romania has progress also in social revenue terms, which rose by 8.7% in the first nine months of this year compared to the same period last year. Also, it is important to note that the National Tax Administration Agency (ANAF) announced that in the first nine months of this year, managed to collect more money about 11.27% over the same period last year. 7.5% was in September, seasonally adjusted unemployment rate in Romania according to Eurostat List of good news in the economy 1. In the 3rd quarter this year, growth was 4.5% over the same period last year. Romania ranks 4th in EU after Estonia, Lithuania and Latvia. 2. For the first time Romania had the strongest economic recovery in the EU, 1.9%, if we compare the 3rd quarter to the 2nd of this year. 3. In the first nine months of this year economic growth rose to 2.6%, supported mainly by agriculture, which increased by 24%. 4. Industry increased by 6.8% in nine months of 2011 compared to the first nine months of last year. 5. Sales business in industry increased by 17.6% and new industrial orders grew by 17.2%. 6. The construction sector has resumed growth after falling sharply in recent years. The volume of construction works increased by 17.1 % in September over the previous month in 2011 and construction works decreased by only 0.1% in the first nine months of this year, compared to nine months of 2010. In the 3rd quarter of 2011, construction grew by 7.4%. Romania has the 4th highest increase in construction activity in the EU in the 3rd quarter of 2011, both from the previous quarter and from the 3rd quarter of 2010. 7. Exports are up 25%. 8. Romanias economical performance is remarkable, given that 3 European countries, Cyprus, The Netherlands and Portugal, had declines of GDP, and in 4 other states - Belgium, Bulgaria, Czech Republic and Spain - the economy stagnated. 9. The budget allocations for public investment increase from €8 billion in 2011 to €8.5 billion in the draft budget for next year. The funds allocated for investment increased from €7.5 billion in 2008 to €8 billion in 2011. 10. Romania is positioned in 2nd place in EU in terms of total investment share in GDP (23.2%), after the Czech Republic (24.8%) in 2011. Romania is positioned in 2nd place in EU in terms of public investment share in GDP (5.5% in 2010), after Poland (5.6% in 2010). 11. GDP/capita, calculated at purchasing power parity, in Romania increased from €10,400 in 2007 to €11,000 in 2010. At the same time, the European average in the last 3 years has decreased from €25,000, in Romanias accession year to the EU to €24,400 in 2010.Eng. Paul Keisch Page 5
  6. 6. News November 17th, 2011 12. We are on track to achieve budget deficit target of 4.4% of GDP, €5.5 billion. In the first nine months of 2011 the deficit was €3.15 billion (2.52% of GDP), down 41.3 % (€2.2 billion) compared with first nine months of 2010. 13. The budget deficit was 6.9% of GDP in 2010. Countries with deficits higher than Romania: Ireland (31.3%), Greece (10.6%), UK (10.3%), Portugal (9.8%), Spain (9.3%), Latvia (8.3%), Poland (7.8%), Slovakia (7.7%), France (7.1%), Lithuania (7%). 14. Romania has the 4th lowest debt to GDP, only 31% of GDP, and the European average is 80.2 % of GDP. Countries with higher public debt than Romania: Greece (144.9%), Italy (118.4%), Belgium (96.2%), Ireland (94.9%), Portugal (93.3%), Germany (83.2%), France (82.3%), Hungary (81.3%), UK (79.9%), Austria (71.8%), Malta (69%) , The Netherlands (62.9%), Cyprus (61.5%), Spain (61%), Poland (54.9%), Finland (48.3%), Latvia (44.7%), Denmark (43.7%), Slovakia (41%), Sweden (39.7%), Slovenia (38.8%), Lithuania (38%), Czech Republic (37.6%). 15. The current account deficit is less approximately 11%. The current account deficit was €3.79 billion in the first nine months of 2011, down 10.8% over the same period of 2010. 16. Annual inflation of 3.6% positions Romania in the 12th place in EU-27, in October this year compared to October last year, after UK (5%), Estonia (4.7%), Slovakia (4.6%), Latvia (4.3%), Lithuania (4.2%), Portugal (4%), Austria (3.8%), Italy (3.8%), Luxembourg (3.8%), Poland (3.8 %), Hungary (3.8%). 17. Romania is among European countries with the lowest unemployment rates. Romania registered in September an unemployment rate by 2.2 percentage points below the European average. 18. Romania is the first EU country that has reduced the monetary policy rate to 6% from 6.25%. 19. As for large investment projects, 25 projects are receiving investment worth about €1.25 billion, creating 7,108 new jobs. Approved state aid: €335.7 million, of which €110 million have been actually paid. 20. State aid for investments over €100 million, employing over 500 employees. Examples: project Turceni energy efficiency (investment of €296.5 million, of which €36 million state aid), Pirelli Tyres Romania factory in Slatina (the investment is €159 million, of which €28.1 million state aid). 21. Large investment projects of at least €5 million and employ at least 50 employees are supported by state aid. Examples: Renault Techonolgie, Aaylex Prod, Delphi Diesel Systems, Automobile DACIA Piteşti, Premium AEROTEC, Lufkin Industries , REMAR, International Automotive Components, Toro Manufacturing Sales, Palace Sinaia, Rombat Bistriţa, Styria Arcuri, Gral Medical, Honeywell, International Metals, Altius International, Cord Romania, IPORO, Contitech. 22. Romanian RON is best among all currencies in the region. The deterioration of the situation in the euro area hit the Hungarian Forint, it depreciated by 11.1% since the beginning of the year so far. At the same time, the Polish Zloty lost 10.5% in value in ten months. During this period, the Romanian RON depreciated by only 2%. 23. As for infrastructure, Romania has 334.4 km of highways and 433.35 km running. Projects for about 100 km will be auctioned and signed in the near future. In 2013, Romania will have about 800 km of highway put into operation. 24. With the new Labor Code, collecting from social security contributions increased by 8.7% in the first nine months of this year compared to the same period last year.Eng. Paul Keisch Page 6
  7. 7. News November 17th, 2011 25. Since the entry into force of the new Labor Code, in May 1st 2011, to November 6th 2011, the number of registered employment contracts increased by 1,192,493 (66.04% permanent). Of these, 773,896 are active contracts. 26. Romania had record budget revenues in 2010, 33% of GDP. For this year, budget revenues are estimated to increase to 33.4% of GDP to reach in 2012 to 33.7% of GDP. 27. ANAF has made budgetary revenues in the first nine months of 2011, with 11.27% higher than same period last year and 5% higher than in 2008. 28. Fitch raised the country rating for Romania to suitable for investment class and provided a stable outlook. 29. Romania has a fiscal risk twice lower than Greece, according to the EC report. Romanias fiscal risk (0.54 points) is close to EU average (0.51 points). The greatest risk posed by Greece (1.02 points), followed by Italy (0.88 points). 30. Romania remains attractive for Global services relocation in 2011, being ranked 25 of 50 countries analyzed by the consulting company AT Kearney. Among the countries in the region, Romania is placed better than Hungary (31st place), Czech Republic (35th place), Slovakia (40th place). 31. Romania is ranked 21 in top the most attractive 35 countries for investors in renewable energy for the 3rd consecutive year, according to Ernst & Young. 32. Romanian companies dominate the annual ranking of the largest business in Southeast Europe based on total revenues as of the 4th edition of the "SEE TOP 100". Petrom OMV Group lead ranking for the 3rd year, with total revenues of €3.63 billion in 2010. Romanian companies contribute to almost half (€40 billion) in total revenues of the best 100 companies (€87.4 billion).Eng. Paul Keisch Page 7