Words of warning

The Commission, an advisory body of the Council of Europe, assessed the controversial legislation following a request from President Klaus Iohannis and indicated that Romania should “remove or better define the provisions enabling the superior prosecutors to invalidate prosecutors’ solution for groundlessness,” and “remove the proposed restriction on judges’ and prosecutors’ freedom of expression.” It also recommended that the country should “reconsider the proposed establishment of a separate prosecutor’s office structure for the investigation of offences committed by judges and prosecutors,” and “abandon the proposed early retirement scheme unless it can be ascertained that it will have no adverse impact on the functioning of the system.” Moreover, Romania is invited to “ensure that the proposed “screening” measures of magistrates are based on clearly specified criteria and coupled with adequate procedural safeguards and a right of appeal to a court of law, and identify ways to strengthen oversight mechanisms of the intelligence services.”
While analysts have yet to agree on the impact those planned changes in legislation might have on the local business environment, the country’s strong economic growth has started to slow down. The European Commission’s Summer 2018 Interim Economic Forecast has shown that Romania’s real GDP growth slowed to 4.0 percent (year-on-year) in the first quarter of 2018, after peaking at 6.9 percent in 2017. “The main driver of the slowdown was a contraction in private consumption as inflation weighed more heavily on real disposable income. Export growth, in contrast, remained very robust in the first quarter of 2018 and outpaced the growth of imports,” the report notes. The end-2018 real GDP growth is forecast to slow down to 4.1 percent in 2018 and 3.8 percent in 2019.
On the inflation front, the report points out that after two consecutive years of slowing prices, inflation moved into positive territory last year. “Headline inflation started to accelerate in the second half of the year mainly on account of rising food and energy prices and further picked up in early 2018 as the effect of the January 2017 tax cuts faded away. Annual headline inflation stood at 4.6 percent in May this year. The reversal of the January excise duties cut in October 2017 will exert an additional pressure on inflation in the first three quarters of 2018. Thus, inflation is forecast to rise to 4.4 percent in 2018 and 3.4 percent in 2019,” according to the report. 
In this context, Business Arena will continue to keep an eye on all the issues affecting the business community, reflecting its views, hopes and challenges.