Roubini: Romania Is Going In The Right Direction, Reforms Must Continue

05.27.2011 ZF English

Romania is going in the right direction, with the economic recovery starting to manifest itself after the restructuring has started to bear fruit, but the recovery is slow, and structural reforms and the fiscal austerity policy need to continue, according to US economic analyst Nouriel Roubini.

Roubini is one of the world's best-known economists, famous for predicting the 2008 global crisis, which earned him the nickname "Dr Doom".

"A lot of sacrifices have been made. In Romania the recession has been painful, but the restructuring is starting to bear fruit, with the economy beginning to recover. But the recovery is below the trend of the region," Roubini said yesterday at a seminar organized by Forum Invest.

In the spring of last year, Dr. Doom came to Bucharest with a message even harsher than the IMF's, saying the budget deficit needed to be adjusted and structural reforms continued, and that foreign investors were needed in order to exit the crisis.

Now he says Romania is going in the right direction, although some of the risks remain, especially at global level, and recommends that adjustments should be continued. He said that reform and fiscal adjustment, corroborated with forreign financial aid, gets an economy "out of the hole," as Romania has done.

Romania last year managed to reduce its budget deficit to 6.5% of GDP from over 7% of GDP in 2009. This year, it needs to continue to adjust its deficit, to 4.4% of GDP, while next year it should reach 3% of GDP.

As for Romania's attractiveness for investors, Roubini, professor of economics at the New York University, warns that Romania is facing corruption problems, which affect both foreign and local investors.