Romanians’ Wealth Has Stagnated
Romanians’ Wealth Has Stagnated

Romanians’ Wealth Has Stagnated

Romanians’ Wealth Has Stagnated

The benefits of living in the European Union’s fastest-growing economy may not endure for Romanians. Despite gross domestic product rocketing as the government splurges on higher public-sector salaries and cuts taxes, the Balkan country’s wealth–calculated as citizens’ net assets as a share of disposable income–remains about the same as it was five years ago.
For some, the gains are funding day-to-day essentials including food and clothes–understandable in a country whose living conditions are among the EU’s worst; others are splashing out on holidays and televisions. Fewer Romanians are investing their windfall in long-term assets such as apartments, Bloomberg reported.
Florian Libocor, an economist at BRD-Groupe Societe Generale SA in Bucharest, says people are behaving like the government’s largess will continue indefinitely. That’s not likely to be possible as the European Commission warns on the sustainability of the budget deficit.
“Citizens haven’t accumulated wealth in recent years–they increased indebtedness based on positive expectations,” Libocor said by phone. “Many people haven’t even waited to see if the promises materialize and they consumed more but also accumulated more debt. At one point, a correction is inevitable.”
The EU predicts Romania’s economy will expand 4.4% in 2018 after eclipsing growth elsewhere in bloc last year. But the first signs of a squeeze on its citizens are appearing.
Inflation reached a 4 1/2-year high in December and the central bank has already begun raising interest rates, which had been stuck at a record low since 2015. Money markets have been ahead of the curve, pushing up monthly mortgage repayments for some Romanians by about 15% in the past three months.
It may already be too late to set aside enough cash to cushion the blow.
Meanwhile, Fitch Ratings affirmed on Friday Romania’s long-term foreign and local currency Issuer Default Ratings at ‘BBB-’ and ‘BBB’, respectively, with stable outlooks.
Romania’s country ceiling was affirmed at ‘BBB+’ and the short-term foreign- and local-currency IDRs were affirmed at ‘F3’.

Short URL : https://goo.gl/ra9f9r
  1. https://goo.gl/3kwJrM
  • https://goo.gl/mXFc6x
  • https://goo.gl/yi88uZ
  • https://goo.gl/rP6qVG
  • https://goo.gl/giKQYG

You can also read ...

Big Data, Online Markets Can Lead to Higher Prices
Information technology is not just transforming markets; it is...
Air India Sale Hangs in Balance
Uncertainty hangs over the Indian government's plans to sell...
Liu He (L) and Steven Mnuchin after the joint statement to avoid a trade war.
With "minutes to midnight", the great US-China trade war...
Italy could set the stage for the bloc’s next crisis if it delivers on its tax-cutting and high-spending policies.
Capital investment in 24 of the EU’s 28 member states has...
Bangla Trade Deficit Doubles
Bangladesh’s trade deficit has almost doubled within 12 months...
A meeting of eurozone finance ministers is set for June 21.
Greece’s creditors have agreed a program of reforms as the...
Cumulative gross financing needs could amount  to $69.3 billion for 2018 for the six-nation group.
While public debt levels remain at manageable levels for most...
Egypt Gets Bids for Power Plant
Egypt next week will announce the winning consortium to build...

Add new comment

Read our comment policy before posting your viewpoints