The Romanian economy is not on a sustainable growth path because the whole GDP increase of 4.8% from last year was driven by consumption, said Ionut Dumitru, president of the Fiscal Council.

He also says that wages in Romania have been going up too quickly and that the country’s budget deficit will become the largest in Europe, reports local Profit.ro.

Dumitru also points to the gap between Romania’s counties, which is widening, as some are growing while others are depopulating.

In the last ten years, the country’s economic growth has been volatile, which is undesirable for a country's development, Dumitru said. The GDP growth reached 7-8% before the crisis, followed by a deep recession. The country has now returned to growth rates of over 4%, but these are hard to sustain in the future.

In 2016, the GDP rose by 4.8%, but the 4.9% increase in consumption had the main contribution. Meanwhile the “dynamic on the investments segment was zero”.

Romania will have the highest budget deficit in the European Union after Spain and Poland, as tax revenues are expected to drop to 25.4% of the GDP, a historic low. If Romania had a collection level of 30% like Bulgaria, the country would record a budget surplus, said Dumitru.

editor@romania-insider.com