SPOTTING THE RIGHT SENTIMENT
2013 – Quite an inert year in expectations, blaming also the neighboring European economic context. But not all the blame is outside. In order to predict, it matters one’s expectations. I do not understand the irrational optimism of various businessmen, launching in almost witty statements regarding the trend of this year in the Romanian economy. This is an outdone approach; maybe it was right for the 60’s but not now, when the realities are far more multifarious.
I don’t see why we should be so afraid of pessimism, because, in this context, it would rather mean to be realistic. For 2013, if I have to define my sentiment towards the economic environment in Romania, I would say that I am a moderate optimist. There are several grounds to sustain my feeling, and among them, I can list a few: a more business-orientated Governmental coalition, a better external perspective regarding the investment risk in the CEE region. There is quite a lot of money outside this country and Romania, as a small country, has the chances to trigger a large pool of investors. These investors may not be the largest, but a large volume of smaller investors with local affinities and even a similar culture may bring the growth that we are all looking for.
REFORMING FROM SCRATCH
The best lobby for investors is what a country really does for them and, before this, a planning strategy and prioritizing of investments should be defined. It is enough to only state that 52 percent of the local economy is still represented by state-owned companies. This is a scary volume for a country that aims at earning the trust of foreign private investors. The structural reforms should be the main priority of the governing authorities and maybe it is time to see some success-stories, after years of failures in this segment.
A matter of efficiency consists of identifying those industries that really can stand for a growth potential. It is really silly for a smart strategy to focus or allocate scarce resources in fields that add up to only 1 percent of GDP, like tourism. Imagine what double growth really mathematically means for the GDP. Instead, a smart move would be to shift the attention towards the industries that really generate profit, highly paid jobs and act as engines for the rest of the economy, such as energy or the automotive industry, which amounts to around 20 percent of Romania’s exports, to give just an example.
KEEPING THE PROMISE
For the local economy, a slippage of assumed reform within the agreement with IMF would be a disaster, so that, in May this year, an utmost letter of intention should be handed in order to compensate over the last years when Romania proved its incapacity to run any coherent reform on its own. There are many voices in the current landscape, including myself, who claim the public debt being the biggest problem that we have. In fact, the major issue is the dynamic of this public debt that increased five times in four years. This, besides the lack of foreign direct investments, since the “classic” engines of growth have ceased to function, as: lending, remittances and FDI.
There is no better moment than now, they say, so, why shouldn’t we respect the healthy patterns and start with courageous reforms, assumed and implemented on the spot. However, great attention should be paid, as I mentioned before, to the strategic sectors taken into account. Because, in my opinion, it doesn’t make any sense to assign large amounts of resources to fields that cannot return a significant result in the local economy. For instance, there is no growth to prosperity model based solely on agriculture for medium-sized countries. Also, we should stop focus on such economy segments that are large supply –eaters. And also, we should escape the false passions of taking more or less grounded sides of an industry and lobbying for its growth potential. I wrote recently about the shale gas investments and the new technologies in this segment.
SHALE GAS - NOT A SHALLOW MATTER
Having returned in February from US, I understood better the shale gas exploitation technologies and, from what I have seen, these will reshape the geopolitical maps worldwide. There is a large growth potential in these resources and by fortune of nature, Romania also has them. The only simple lesson to be learned is that the passions and local fevered political speeches should cease and leave the numbers and economic opportunities to prevail. Romania is almost forced, due to its dependence of unpredictable Russian gas and because of endemic economic stagnation, to earn a place at a very welcoming and beneficial table.