National Bank governor: Romania does not pose any risks of tough landing following its economic growth

Romania’s National Bank governor Mugur Isarescu declared that Romania poses no risks whatsoever to suffer a ‘tough landing’ following its economic growth, adding that the GDP will witness an annual growth rate of 6%. In an interview for the Romanian news agency Mediafax, Isarescu argued that the 2008 growth rate of 9% cannot be characterized as an overheating but warned that the constructions sector is already dealing with this phenomenon.

Isarescu’s declarations come to refute the argument of several foreign experts who declared that Romania, together with Lithuania, Estonia, Latvia and Bulgaria make up a group destined to ‘tough landing’. Isarescu that the arguments he read have no solid ground.

Even though these countries have many things in common like registering the highest growth rates, there are also fundamental differences like the monetary policy mechanism. Isarescu declared that three of the mentioned countries work in a currency board system, which he classified as a limited one. Moreover, he added that this system deletes any other monetary policy and basically transforms the central bank into a statistics institute.

Isarescu underlined that in the upcoming years Romania will face economic growth rates of 6% per year. However, he declared that if the main markets where Romania exports present low economic activities, then naturally Romania’s growth rate will be below 6%.