Three graphs Romanian policy makers will not show you

Election years are a good time to present results. A favorite comparison that I have seen these days is between Romania’s economic growth in 2011 and that of EU27. Of course this comparison is chosen for a reason as Romania is expected to have grown faster in 2011 than EU27.  But does one year matter? Not for me. That is why I will show you three graphs that paint a different picture.
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First let’s look at inflation. How did Romania do  in the last three years relative to EU and individual countries in the region? Not very well. Since 2010 Romania still has the highest average inflation per year. Even Iceland, a bankrupt country, managed to bring average inflation to a level that is lower than for Romania.

Let’s now turn to economic growth. As you can see only in 2011 Romania is growing a bit faster than EU but still slower than its peers in the region. The comparison with EU is not really correct as developed economies will never grow as fast as emerging one. Thus the comparison that matters is with similar countries and there Romania is still behind.

However, in order to compare economic policies we need to look at average yearly growth for the last three years in ROmania, Eastern Europe and EU. The idea here is that all three had a period of deep recession in 2009. However, the economic performance of 2009 is the result of good or bad economic policies in each country. For example good economic policies would in theory be able to reverse the lost GDP in 2009 via economic growth in 2010 and 2011. Thus, on average good economic policies should at least deliver zero growth over the period.  Unfortunately this is true for EE and EU but not for Romania.

Here is the graph that proves this assumption:

It is easy to bias a conclusion towards your side of the story when you pick  certain periods or different entities. Comparing Romania with EU is not really relevant. A more appropriate comparison is for Romania with EE or emerging economies. This way we will get a more realistic picture of our economic performance. So far we can see that in the last three years average inflation remained high relative to EE or EU. The under performance relative to these regions is also seen when we compare average economic growth for the period 2009-2011. These numbers tell me that our economic policies for the last three years have not worked. Maybe it is time to come up with new ones.


7 thoughts on “Three graphs Romanian policy makers will not show you

  1. Florin,

    In previous post you sugested new economic policy to include a more relaxed fiscal policy. As the budget deficit is still high (by the end of the year will be higher then estimated), how can you reduce taxes? This goes in to the face of NBR’s recomandation not to renew IMF agrement and against increased spenidng promised by the new government.

    On a separate matter how do you interpret yoy DEC11 declining exports? Outlier or begining of a new trend, bad omen for 2012 GDP and budget revenue?

    1. @I-conomics
      My suggestion is not only for lower taxes. It comes with a credible/committed aggressive cut in expenditure. To be honest we should not be concerned with a deficit as lower taxes should push a responsible government to reform. Basically I propose to starve the public sector and thus put it on a diet. In the meantime we give non-discriminatory support to employees and employers to consume and invest.

      On the export part I would wait for few months. It could just be an outlier but let’s wait.

  2. @ddr
    EE:Eastern Europe
    Albania, Czech Republic, Estonia, Lithuania, Latvia, Moldova, Bulgaria, Bosnia and Herzegovina, Belarus, Macedonia, former Yugoslav Republic of, Montenegro, Poland, Romania, Serbia, Slovak Republic, Slovenia, Ukraine, Kosovo, Croatia, Hungary

    EU = European Union

    The situation would look even worse for Romania if I use only CEE+
    Albania, Estonia, Lithuania, Latvia, Bulgaria, Bosnia and Herzegovina, Macedonia, former Yugoslav Republic of, Montenegro, Poland, Romania, Serbia, Turkey, Kosovo, Croatia, Hungary

    thanks for the tool

  3. dle Citu eu scriu aici fara traducere ca banuiesc ca doar dl igas ar avea oarece probleme de perceptie.
    manipularea prin cifre a devenit in romania mult mai periculoasa decat cea a sociologilor si a finkelilor si silbersteinilor din spatele politicienilor.pentru ca daca manipularea politica se adereseaza unei culturi politic slabe,ea are totusi de a face cu perceptii de bun simt ce tin si de viata reala,simpla,obisnuita si tine cont de feedback de la cetateni.cultura economica a cetatenilor nostri este inca si mai scazuta decat cea politica.prin urmare aici se produce in electorat o nemiloasa manipulare chiar cu 180de grade. de aceea spun ca e important sa explicati simplu, cu cifre si de multe ori acelasi lucru, de fiacare data cate un lucru,nu mai multe ca i-ai pierdut pe cei ce doresc sa va inteleaga.dar eu cred ca aveti un rol infinit mai important decat sefii de campanii electorale,platiti cu sume imense si adusi din lumea buna , poate cei mai tari in domeniu.
    un exemplu , l-am auzit pe daianu parca spunand ca rederenta la extragerea de metele pretiose nu este nicaieri in lume mai mare de 4 %, iar azi mi-a spus un tip ca in africa de sud e 25% ,sa caut pe goagal,nici nu am chef, dar am intrat si eu in ceata, care dupa ce am citit doctrine si literatura politica, am facut si psihologie , dupa care am inghitit si tratate de manipulare si de vreun an ma uit doar la emisiuni de economie si am invatat si marxism in celalalt regim. si uite ca m-am zepecit:”!!!!!

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