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Editorial January - Year of hope

With a new government at the helm, Romania hopes to return to growth this year, while treading a narrow path between macoreconomic constraints and social pressure. Europe hopes to see a revival of transatlantic relations now that the new US administration has taken over in Washington, while the launch of vaccination campaigns around the world has brought a ray of hope to end the COVID-19 pandemic.
There is so much to hope for in 2021, but the World Bank has warned that global recovery will not reach the expected levels, “unless policy makers move decisively to tame the pandemic and implement investment-enhancing reforms.” In its January 2021 Global Economic Prospects, the financial institution emphasizes that “top near-term policy priorities are controlling the spread of COVID-19 and ensuring rapid and widespread vaccine deployment. To support economic recovery, authorities also need to facilitate a re-investment cycle aimed at sustainable growth that is less dependent on government debt.”
The report also points out that the short-term outlook is uncertain. “A downside scenario in which infections continue to rise and the rollout of a vaccine is delayed could limit the global expansion to 1.6% in 2021. Meanwhile, in an upside scenario with successful pandemic control and a faster vaccination process, global growth could accelerate to nearly 5%.”
Moreover, the report notes that the pandemic is likely to have long lasting adverse effects on global activity, and “if history is any guide, the global economy is heading for a decade of growth disappointments unless policy makers put in place comprehensive reforms to improve the fundamental drivers of equitable and sustainable economic growth.”
World Bank Group President David Malpass said: “While the global economy appears to have entered a subdued recovery, policymakers face formidable challenges - in public health, debt management, budget policies, central banking and structural reforms - as they try to ensure that this still fragile global recovery gains traction and sets a foundation for robust growth.”
Meanwhile, Romania expects its economy to return to 4.3% growth in 2021, after an estimated 4.4% decline last year. The National Prognosis Commission (CNP)forecasts the country’s 2020 gross domestic product at 1,040 trillion lei (over 213 billion euro). According to CNP’s projection, agriculture is to shrink by an annual 21.9%, services by 2.3% and industry by 8.7% in 2020. In turn, construction is expected to increase by an annual 10.6%. Exports of goods and services are expected to decrease by 10.6%, while imports are projected to contract by 5.9%  in 2020.

Find more expert opinions and economic predictions in this edition of Business Arena.

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