The crisis had a major negative effect on the Romanian economy: it had lowered the potential GDP. While mostly a theoretical concept it is not hard to feel that this is true. The potential GDP is that value around which an economy can grow employing all available resources and not create inflationary pressures.
I know, it sounds very hard to achieve and harder if you do not know the exact value of the potential GDP. Nevertheless, one can assume that in the years before 2008 Romania could grow at a pace of 6% per year without creating inflationary pressures. Now that value it is much lower. How much lower?
Well, there are some estimates by the NBR. They say that up to 2008 the potential GDP for Romania was around 6.25% while today is between 2.5% and 3%. A drop of 3% in couple of years. And the future looks bleak.
There is one more problem for us stemming from a lower potential GDP: higher probability of recession. In 2008 it took a huge global shock, together with a monetary fiscal and policy shocks (both restrictive) to bring the economy into recession territory. The huge brute force was needed because of the high potential GDP. That “problem” does not exist today. With a low potential GDP and a small open rigid economy a small negative shock can push the Romanian economy into recession.
Again to be ironic and cynical, besides the negative shocks from the global economy which will hit us with 100% certainty, it will require less “effort” from our policy makers to screw it up. Let’s just watch and see what they come up with this time. I can guarantee it will not take much.