Priority actions to overcome the economic crisis in Romania

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Professor Radu Pencea writes about the effects of the current economic crisis and actions meant to overcome the decline, citing Nobel Prize laureates. According to Prof. Pencea, comparing the crisis in 1929-1933 with the current one, one can see some similarities, but one big difference also: the crisis of the early twentieth century caused a 40% decrease in GDP, while the current crisis determined only a 5% contraction in the GDP.

However, exactly as in 1929-1933, there is a lack in simple solutions able to quickly determine a recovery, the state's intervention being considered now, as then, a life buoy.

Analyzing the evolution of the Romanian economy in the first half of the year, Prof. Pencea sees some recovery signals, such as a 75% decrease of the current account deficit or the doubling of automotive export, but also enough problems that hinder economic Romania in a relatively short period, such as the inability to apply tax cuts, a classical anti-crisis action, since Romania already has low taxation compared to other EU Member States. However, Prof. Pencea argues that public expenditure is needed more than most other actions, and should be easy to implement, since European funds absorption is at a very low 7% of the available money.