www.business-review.eu Business Review | June May 2016 2020
MACROECONOMY COVER STORY 15 14
What shape will Romania’s economic recovery take? Economists and policy makers have been trying to predict the way the economic recovery might look. Will the recovery from the coronavirus recession be V-shaped or U-shaped? By Claudiu Vrinceanu
G
overnment representatives have constantly said that Romania’s economy will see a V-shaped recovery and
have brought several arguments to support their statements. According to Finance minister Florin Citu, the economy has the potential to return to the growth levels seen in the beginning of 2020 in the second half of the year. This optimistic forecast - the V-shaped recovery - is embraced by many analysts, with 7 out of 10 economists surveyed expecting a comparable resurgence after what may be a strong economic downturn. “A V-shaped rebound scenario is very possible for Romania, but up to a lower level than we had before the crisis,” said Ionut Dumitru, chief economist at Raiffeisen Bank. The idea of an economic rebound in the
A severe reduction in economic activity is expected in the second quarter
shape of the letter V is also in line with the 2020 Convergence Programme. A severe
And the speed of the economic recovery will
On the other hand, some entrepreneurs
reduction in economic activity is expected
be influenced by the performance of several
are more pessimistic. “Taking into account
in the second quarter (-14.4 percent), with
industries that have been severely affected
the way things are evolving so far, we can
the quarterly profile highlighting a predomi-
by the lockdown: the manufacturing industry
structure the crisis in three stages: the first
nantly “V” shape, but not returning to the
saw a decline of about 18 percent in March-
is the shock stage, and it can take between
situation presented in the winter scenario (in
May compared to the corresponding period
6 and 18 months. Afterwards comes the
the absence of coronavirus), with a proper
of 2019, and the textiles, clothing, leather,
recovery stage. Finally we’ll go into the ‘new
recovery in the fourth quarter of 2020,” ac-
and automotive industries have experienced
normal’ - the growth stage,” said Radu Ne-
cording to the 2020 Convergence Programme.
even sharper declines of over 35 percent.
gulescu, the founder of Trencadis.
The scenario is based on a time-limited nega-
People and companies’ perception of the
Globally, estimates are not very optimistic
tive economic impact of around 4 months
Romanian economy improved in May, after a
either. Economist Nouriel Roubini hopes that
(March-June), followed by a partial growth in
sharp decline in the previous month. Accord-
although long, the economic recovery will be
July-September, based on China’s experience,
ing to BCR, Romania has overcome the lowest
in the shape of the letter U, but he fears that
which is showing signs of recovery after 4
point of the crisis and is heading for a rapid
we will actually have to deal with an L-type
months.
V-shaped recovery. “The hard part seems to
recession.
Most Romanian economists believe that
have passed for the Romanian economy and,
Moreover, a Bank of America survey of
the scenario of a V-shaped recovery is plausi-
in the absence of a second wave of infections,
223 fund managers found that just 10 percent
ble, provided that the current declining trend
confidence will continue to improve, given
expected a V-shaped rebound from the
in the number of coronavirus infections is
that more of the restrictive measures will
COVID-19 recession, and 75 percent predict a
maintained and the disease does not return.
soon be lifted,” said BCR analyst Eugen Sinca.
slower U- or W-shaped comeback.
