Comment 04 Jul 17

Economic Storm-clouds Hover Over Romania

After weeks of political turmoil, companies and investors in Romania now face growing uncertainty and a fiscal overhaul that risks putting the country’s recent economic gains in jeopardy.

Roxana Voicu-Dorobantu
BIRN
Bucharest
In mid-June 2017, the country faced a political crisis with the ruling party passing a motion of no confidence against its own government, bringing down Grindeanu and replacing him with former Economy Minister Mihai Tudose. Photo: GotCredit/Flikr.

Romania seems to have shifted in just a couple of months from moderate and measurable risk by the European Commission in its seasonal forecast, to full-blown uncertainty.

In conditions of risk, a company has a choice to mitigate it  - fully, partially, or not at all. But it has that choice. Uncertainty leaves no real choice. Everything may then change suddenly, with no reason. Damage control remains the only option.

Romania is a textbook case of freeze frame: “This is me. You’re probably wondering how I got here.” The forecast for the economy has gone from accelerated growth to “What now?” mainly because of distrust and perceived volatility in decision-making.

It all seemed so well back in December. The new ruling party, the Social Democrats, PSD, allied with the Alliance of Liberals and Democrats, ALDE, formed a cabinet under the veteran Social Democrat Sorin Grindeanu to implement the Governing Program.

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