Dan Pălăngean

Senior Expert, National Bank of Romania

The 2020 GDP of Romania

The National Institute of Statistics confirmed the signal result of the economic growth for 2020 at the level of -3.9%, in the first preliminary version made public. The nominal value resulting from the overall calculation for the last year was RON 1,053,881.4 million, above the recent forecast and almost identical to that of 2019 (RON 1,053,884.8 million). However, it was lower in euro by about 4.22 billion, due to the increase in the average annual exchange rate (from 4.7452 RON/euro to 4.8371 RON/euro). The result – redistributed between quarters. Beware of base effect! More

Long-Term Interest Rate Fell Below 3%

Dan Pălăngean

Long-term interest rates for Romania fell by almost one percentage point in just two months, according to data released by Eurostat. After increasing up to 4.83% in April 2020, at the end of June it reached a level below the threshold of four percentage points (3.89%). Beyond the obvious effects on future budget payments, this indicator is critical for convergence purposes and the adoption of the euro. More

The Effect of Brexit on Romanian Foreign Trade

Dan Pălăngean

Over the last few years, the United Kingdom has been Romania’s most important foreign trade partner with whom we have managed to record a significant trade surplus. The island economy’s exit from the community bloc and the establishment of barriers in the trading of goods, even non-tariff barriers (the granting of zero customs duties was finally recorded during negotiations), will affect the trade balance of our country. More

Romania’s Recovery According to the World Bank

Dan Pălăngean

The data included in the autumn report of the World Bank, “COVID-19 and Human Capital”, which brings the forecast for Europe and Central Asia countries up to date shows the skepticism of this institution’s specialists regarding a rapid recovery of the Romanian economy, by reference to official estimates issued locally. Thus, the National Commission forecasted an economic decrease of -3.8% this year, followed by a recovery of 4.9%, which would bring GDP level in 2021 to + 0.9% above that registered in 2019. More

Remarks on the 2020 Romanian GDP Estimate – Reduced for the 3rd Time in the Official Forecast

Dan Pălăngean

The GDP 2020 estimate has been reduced for the third time in a row in the so-called Preliminary Autumn Forecast for the budget amendment published by the specialty National Commission. From an economic result of RON 1,141.4 billion according to the estimate issued in February, we went to RON 1,082.1 billion in April’s estimate, to RON 1,058.0 billion in August and now we reached RON 1,050.5 billion. More

Taxation of Wage Earnings for Pension Purposes in Romania, since 1950

Dan Pălăngean

The income tax has increased about four times in Romania since 1950, according to data published by the National Institute of Statistics (INS). The evolution of gross and net earnings shows that we have reached a doubling compared to the period before the political regime change, which occurred in 1989 (see data presented in extenso and centralized by decades in the table below). More

Romania’s Public Debt Relative to GDP – Implications

Dan Pălăngean

The public debt officially measured by the Romanian Ministry of Finance based on the European methodology advanced, in July 2020 alone, almost as much as in the whole second quarter, when Romania was caught in the middle of the pandemic-induced crisis shock and the quarterly GDP decreased by 12.3% compared to the previous quarter. The explanation for the relative increase as a public debt share of GDP (2.1 percentage points in Q2 and 2 pp in just one month, July 2020) is not limited to the increase by about 40% of the additional monthly borrowed amounts (RON 13.5 billion compared to the monthly average of 9.7 billion in full pandemic), but also in the reduction of the reporting base by over RON 20 billion (approx. EUR 4.1 billion) as a result of the methodology used. More

The COVID Crisis and the 2nd Pillar of the Romanian Pension System

Dan Pălăngean

Far from the public attention, the value of the assets held in the seven private funds that manage the pension money in Pillar II for seven and a half million future pensioners decreased dramatically in the second part of February and continued to decline during March, with the minimum being reached on the 18^th of March 2020. More

The Effects of the Coronavirus on the Labor Markets in the EU

Dan Pălăngean

Romania was among the least affected EU Member States in Q2 2020 in terms of temporary layoffs, reduced working hours or job losses, according to the analysis published by Eurostat. The consequences of Covid19 pandemic varied significantly from one country to another, the most affected being Spain, Italy, Cyprus, Ireland and Greece. More

The Romanian Leu, Koruna, Zloty and Forint in Pandemic: A Comparison in Terms of Stability and Its Effects

Dan Pălăngean

The Romanian leu was much more stable during the pandemic than the currencies of Central European countries with a similar exchange rate regime – the Czech Republic, Poland and Hungary. Data published by the National Bank of Romania shows a much lower devaluation of our national currency against the euro, of only 1.95% between January and October, well below the levels recorded by Czech koruna (-7.38%), Polish zloty (-6.44%) or Hungarian forint (-7.78%). More

More than a Fifth of Romanians Are Employed by Multinationals

Dan Pălăngean

Germany (16.6%), France (12.4%) and Italy (9.2%) are the countries that hold the largest share in the Romanian economy by the number of employees operating in 80,591 groups of enterprises, according to the data processed and published by the National Institute of Statistics (INS) for 2018. Together with the USA (8.3%) and the Netherlands (7.6%), they control most of the existing enterprise groups in Romania. More

Reading Between the Lines

Dan Pălăngean

The macroeconomic situation of Romania is a subject of considerable debate inside the country. The important development of the country is, nevertheless, marred by imbalances and underwhelming reforms, constantly raising the specter of outsized impact of crises both internal and external. What follows is a selection of quotes from the Council Recommendation on the 2020 National Reform Programme of Romania and delivering a Council opinion on the 2020 Convergence Programme of Romania. The document was published on May 20th in 2020 and contains interesting tidbits, despite the Brussels language that may lead to readers’ eyes glazing over. More