Financiarul

President Traian Basescu told National TV commercial channel on Monday that if Romania continues to record positive economic results, as the decline in the Gross Domestic Product (GDP) in the third quarter of 2009 was smaller than expected and in the fourth quarter the GDP should decline 5 or 6 percentage points, positive economic growth might resume in Romania in the second quarter of 2010.

‘The GDP declined less then expected in the third quarter of 2009. It had been estimated at 8.5 percent but it was just 7.1 percent in the end. If we take a look at the September industrial output, we will see a rise of 24 percent from the month before and of 13.4 percent in the construction sector. That means there are good signals, even if not definitive.

We will have to wait for the fourth quarter, but if we keep within these parameters, the decline in the fourth quarter might be 6 or 5 percent, which would predict negative growth in the first quarter of 2010 only, after which economic growth should resume in the second quarter,’ said Basescu.

The President also said that the Government deficit has to be reduced from 7.5 percent to 5.8 percent so that the objective of Romania switching over to the single European currency in 2014 may be achieved.

‘If we consider the Government revenues and build the Budget on a negative growth of minus 8 percentage points of the GDP, the situation for the next year improves because there will be a growth of between 0.5 and 1.6 percent or even 2 percent, and then things will get more relaxed. Yet, given that we cannot overcome the 5.7-5.5 percent deficit, there will still be enough restrictions in place,’ said Basescu.

He also said that given the estimates for the current quarter, the GDP this year would be the same as in 2007. ‘That is how far back the crisis has set us. Now it will depend on how quick we will be able to reach the 2008 GDP to see how many years we have lost because of the crisis. I do believe that we have not lost a lot,’ the President said.

Basescu also said that thinking about 2011, the Government should cut the flat income tax from 16 percent to 14 percent, mentioning that the flat income tax has proved successful. On the other hand, the President mentioned that he is a supporter of prudent pay rises.
‘We have to understand that we cannot consume more than we can produce,’ said Basescu. He explained that Romania has taken out a loan because of the policies of the past four years that encouraged consumption and led to pay increases that exceeded productivity.