December 02, 2005
Meanwhile, back in Romania
Because we do still live here, and not in Kosovo or Albania.
Things that are going on here:
-- It was National Day yesterday, and we managed to miss the big parade for the third year in a row. Boooo.
In our defense, it was miserable weather again... chilly rain falling in sheets from a steely sky. Not to ring the American bell, but there is something to be said for having the national patriotic holiday in the summer.
-- Condoleeza Rice is coming to town next week, to sign a treaty allowing the construction of US bases here in Romania. This has been in the air for a while now, but it's finally going to happen. Base construction will start next year.
-- Meanwhile, potential scandal continues to simmer around the issue of secret CIA bases in Romania. Many of you may recall that, a few weeks back, the Washington Post broke a story about the CIA using unnamed "Eastern European countries" to detain terror suspects -- holding them without trial and (everyone assumes) torturing them.
But while there are some very suspicious records of CIA flights in and out of Romania, there's no smoking gun: nobody can point to such a base, nor has anyone come forward and testified that it exists. And without hard evidence, it looks like this one is going to blow over.
-- Romania's projected economic growth for 2005 will be around 4.5%. This is not bad, but it's the lowest since 2001; the average 2001-2004 was over 6%, and last year saw a blazing 8.3% growth rate.
Growth has slowed in part because of the terrible floods this past summer. Agriculture is a big part of Romania's GDP, and the floods (and accompanying bad weather) probably knocked 2% off GDP. Also, several important Romanian exports -- things like steel and concrete -- saw prices level off or fall in 2005. And the strong leu has slowed export growth.
But it may also be that Romania has picked all the "low hanging fruit" in terms of economic reforms, and that growth will slow unless deeper changes are made. We won't know for a while yet.
Me? I'm cautiously optimistic. It looks like most of Eastern Europe had a weakish year. Several of Romania's neighbors -- Bulgaria, Serbia, Hungary -- saw a drop of 1%-2% in growth since last year. The projection for next year is around 5.5%, and that hasn't changed.
And that was the Friday news update from Romania.
Posted by douglas at December 2, 2005 06:04 PMYes, the downturn in growth is not so much due to lack of reform but probably because of reform. The Justice and Truth Alliance's reforms have been quite austere this year, and have probably resulted in harder conditions for producers (and many strikes as well!). Add to this the floods and the strong leu, and it's perfectly normal for growth to slow down. In fact, I think Romania's done quite well and is a very resilient economy in this respect - if this had happened in 1997-1998, we would've seen economic declines of 4.5%!
The reforms, however, needed to be done, and this will probably result in higher growth in the future. In fact, I wouldn't be surprised if growth in Romania next year hovers at around 8%, provided that the agricultural yield is good.
Posted by: Mihai at December 3, 2005 11:02 AMYes, the downturn in growth is not so much due to lack of reform but probably because of reform. The Justice and Truth Alliance's reforms have been quite austere this year, and have probably resulted in harder conditions for producers (and many strikes as well!). Add to this the floods and the strong leu, and it's perfectly normal for growth to slow down. In fact, I think Romania's done quite well and is a very resilient economy in this respect - if this had happened in 1997-1998, we would've seen economic declines of 4.5%!
The reforms, however, needed to be done, and this will probably result in higher growth in the future. In fact, I wouldn't be surprised if growth in Romania next year hovers at around 8%, provided that the agricultural yield is good.
Posted by: Mihai at December 3, 2005 11:03 AM