After two years of "unhealthy" economic growth, three further years of healthy economic contraction as if in times of war, 2000 is the first year when authorities announce this time it's "healthy" economic growth.
Between 1995 and 1996 Romania had a cumulated 11% economic growth, characterised as unsustainable because it was achieved at the expense of a useless consumption of resources, on products that could not be marketed, on debts, arrears, imports, artificially low prices and subsidies. As the authorities ran out of resources to keep the economy afloat, between 1997 and 1999 followed an economic decline that topped the worst expectations. Overall, Romania lost in three years almost 18%.
If we were to make a simple calculation of what happened in the last ten years, with all the economic ups and downs, Romania would find itself somewhere at the middle of 1992. It is a bitter truth. In seven years we haven't progressed at all. All that was gained melted away instantly.
But what is more tragic is that we are in fact somewhere in the '70s, because even in the Ceausescu times the economy had a similar evolution. Between 1988 and the end of 1992 the economy dropped no less than 33%, and the worst period was 1989-1992, when 32% were lost. We must therefore go back in time to see where this 33% decline compensates.
It is cruel to find now, in statistical data, where Romania truly stands. Somewhere in the '70s. In the year 2000.
All this wobbling pertains to the "health" of what is produced in the economy, and on decisions that influence a country's stride for many years.
What is ironic is that the people in government are the beneficiaries, in a positive or negative sense, of what they left behind and how their precursors performed. Some of the "merits," good or bad, belong to someone else. But the label on a government or another, on a premier or another, will remain as shown by effective data, and explanations are "just explanations" that matter less.
After three years of decline comparable to war-time rates, 2000 will be a year of "healthy" economic growth. It's good to say this because this way we can know what to expect next year.
The economic growth this year, estimated at 1.3-1.5%, comes as a result of an economic improvement over the previous years, so not much was lost, as well as from a decision made early in the year to cut the export profit tax.
Economic decline has stopped exclusively due to exports, whose growth rate is compensating the continuing drop in consumption and investments. Plus, it absorbs the worst drought that struck agriculture in the last 50 years. Had agriculture done well and the euro not fallen against the dollar, we might have been frightened by the extent of the economic growth.
The 5% tax on exporters prompted many companies to think about manufacturing for exports, because survival comes from abroad. It further prompted them to stop trying to end up at a loss or with meagre profits so the state doesn't levy taxes.
The beneficiary of this economic growth is the Isarescu government and the Isarescu Premier, whose report after seven months of office looks positive. An improvement, however small, of the economy, is creditable to the Vasile government and perhaps to the Ciorbea government. What belongs to the Isarescu government are the strategic decisions on imports and taxation early this year, and especially the fact that they were submitted to the IMF as an accomplished fact.
Economic growth will not immediately be echoed in the living level and therefore the populace cannot reap the benefits. The tangible effects at the end of each month will be seen much later; most likely, the "good" results will belong to the future government. Which will deliver them as a report, too.
In 2001, the economy is expected to grow 4%, and inflation to drop to 20%. The budget will have more resources from taxes, but mostly from reducing the interest burden. The extra resources will be diverted to consumption and investments. Perhaps the exports growth rate will not remain so high for long because it is rather extensive, without a high added value. Developments will jam then, because no matter what decision is made, the economy in its present structure can no longer back exports. This must be anticipated now, lest we find ourselves in a year or two in the same place as today. As after twenty years.
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