Vasilescu: Romania is consolidating its exit from the recession

• Lending will need a new beginning

Romania is currently consolidating its exit from recession, Adrian Vasilescu, advisor to the governor of the Romanian National Bank (NBR) said at the EU-COFILE seminar held yesterday, hosted in Sinaia by the NBR, the Romanian Banking Association (ARB) and Alpha Bank. He added that, in this context, the process of lending needs " a new beginning".

Adrian Vasilescu said: "We need to prepare for this new normalcy, and lending will need a new beginning because it is clear the crisis has entered a new level, we are out of a recession at this time, the economic data shows that not only the recession won't be back this year, the exit from the recession will actually be bolstered, but we will still be left with the crisis and after the crisis there will come something that we will all begin to sense instinctively".

The advisor to the Governor said that the world is changing and that we need a new lifestyle: "What is important is that we make a new plan for the long term, because this is what will happen. There won't be as much money as there was until now, there will be less of it and it will be more expensive, it will be scarcer than it was. This living on borrowed money, which tasted like honey to most of the world, is over. (...) We are now entering an age where we need to make the appetite for consumption equal to the appetite for efficient work. Everyone who succeeds in having these two be equal, will be happy in the coming age. Everyone else will suffer".

He said that right now, no one is considering encouraging consumption by lending: "What we are currently interested in is to make sure that money intended for consumption reaches the population indirectly, meaning banks would lend to companies, companies would create jobs and pay higher wages and thus, money from the banks would end up in the wallets of people for consumption through companies. It is just such a method for creating the equivalence between the appetite for consumption and the appetite for efficient work. What the NBR currently wants is for money in the banks to end up in companies and to support output, and from there on it's only output that can support consumption by creating more jobs, by creating more money for wages and in particular by having money be paid as a reward for performance".

Adrian Vasilescu said that Romania will end this year with economic growth, as the figures are beyond expectations.

He said: "At the moment, we are consolidating the exit from the recession. (...) It is obvious that this economic growth is consolidating, the figures are higher than the expectations for this end of the year, and whatever may happen in Q4, we see that it is mathematically impossible to go backwards. It is clear that we will end the year 2011 with economic growth".

This growth was mostly determined by the industry, in particular by the processing industry with foreign capital, and less by agriculture which has a lesser contribution to the GDP, according to the advisor of the Governor of the NBR.

The estimated GDP (seasonally adjusted data) estimated for Q3 was 143,467.9 million lei, up (in real terms) 1.8% over the previous quarter, according to data by the National Statistics Institute.

The sectors which contributed the most to economic growth in Q3 were agriculture, construction and industry. Agricultural activity increased 22.1%. Construction increased 6.9%, and industry rose 5.9%. On the other hand, services saw a drop in volume of 3.1% during the reviewed period.