Why I am skeptical about Romania(published on 22.02.2012)

Often enough people mistake my skepticism for pessimism. Especially those that are activating in the political arena and with whom I happen to disagree. Most of the time my reply is that I try to be as realistic as possible and assess the situation based on their policies. Last time I was called a pessimist last night on a TV show.

Romanian policies brought potential growth from 6.6% to 0% in 3 years

A lot of times I have the feeling that the official data in Romania does not reflect the reality around us. I had this feeling last week when I wrote about the output gap and how the fact that it is negative until 2013 could mean that Romania has room to grow fast without inflationary pressures.  On the other hand my view has always been that bad economic policies in the last few years have had a negative effect on Romanian potential GDP.

Google Translate from English to Romanian

Romania 2012: Fiscal Policy

There is not that much you can argue about when it comes to the fiscal budget of the following year. This is because we talk about estimates and no one has perfect foresight.  One political party takes a view and it goes with it.  The rest of the world – oppositions, analysts and business people – can either accept it or have their own view and take decisions based on that. Then, if it does not pan out market forces should punish the government by increasing the cost of borrowing for the government and the electorate should do it next election day.