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Editorial- Business community advocates more cooperation among decision makers

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While the pandemic-induced economic slowdown has hit local business hard, the Foreign Investors Council (FIC) suggests that Romania's political decision makers should all cooperate and work out a budget structure that goes beyond electoral cycles and creates conditions for economic recovery.
It is not clear whether such a target can be achieved in the short term, but an FIC release points out that "the recently adopted measures which will bring structural changes in the budget will generate, according to the National Bank of Romania the largest deficit in recent years: - 11% of GDP." It also indicates that the changes "will have an impact on Romania's ability to access significant amounts of European funds and could trigger modifications in the ratings of international agencies." The FIC release emphasizes that "one of the major problems with such a large budget deficit is the difficulty or even impossibility of financing it on the financial markets.
In conclusion, FIC notes that "the only way to solve the problems facing Romania's economic recovery is that all decision makers cooperate – the Parliament, the Government, the President - when the public agenda requires the adoption of measures that could affect the entire society."
In the meantime, OECD’s Interim Economic Outlook reveals a mixed picture, and argues that "building confidence will be crucial to ensure that economies recover and adapt."
"Uncertainty remains high and the strength of the recovery varies markedly between countries and between business sectors. Prospects for an inclusive, resilient and sustainable economic growth will depend on a range of factors including the likelihood of new outbreaks of the virus, how well individuals observe health measures and restrictions, consumer and business confidence, and the extent to which government support to maintain jobs and help businesses succeeds in boosting demand," the report said. In this context, the global GDP is expected to fall by 4½ per cent this year, before growing by 5% in 2021.
Even so, media reports have shown that Romania's industrial production gained 3.9% m/m in August, with manufacturing recording a 4.2% m/m increase, reducing the annual decline to -4.6% compared to -7.2% in July. In turn, mining and energy dropped by -10.3% y/y and -1.9% y/y respectively, posting a minor improvement from the month before.
As always, Business Arena will continue to keep an eye on all the issues affecting the business community, reflecting its views, hopes and challenges.

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