{
  "title": "Eastern Europe and Romania—The Path to Prosperity by Christine Lagarde in Bucharest",
  "publication": "IMF News, July 16, 2013",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/sp071613",
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  "summary": "Overall global growth:",
  "authors": [
    "Christine Lagarde Managing Director"
  ],
  "publishDate": "2013-07-16",
  "sections": [
    {
      "heading": "The Global Context",
      "content": "- Overall global growth:\n  - \"the global economy should expand by around 3.1 percent this year, the same as in 2012.\"\n  - \"euro area—where growth still in negative territory to the tune of 0.6 percent\"\n  - \"emerging markets and developing economies ... with 5 percent growth this year.\"\n- Risks and watch points:\n  - Ongoing fallout and \"too many speed bumps in the road to strong and sustained global growth.\"\n  - Europe could worsen before improving; U.S. debt ceiling uncertainty.\n  - Risk that the slowdown in emerging markets could persist due to domestic tighter credit, structural constraints, weaker global demand, and financial stability concerns.\n  - Market turbulence and the unwinding of unconventional monetary policy require careful phasing and clear communication.\n- Focus areas going forward: people, policies, and partnerships."
    },
    {
      "heading": "Lessons from Your Neighborhood",
      "content": "- Past transformation and growth:\n  - \"Between 1995 and 2007, Eastern Europe grew faster than all other emerging market regions, with the exception only of China and India.\"\n  - \"Average incomes have tripled in the past two decades, from about US$3,000 in 1993 to more than US$10,000 today.\"\n- Crisis-era vulnerabilities:\n  - Capital and credit inflows fueled excess demand; fiscal policies exacerbated imbalances.\n  - \"current account deficits reach double-digits in many countries; for some going as high as 25 percent of GDP.\"\n  - The 2008 crisis produced double-digit declines in many countries.\n- Recovery status:\n  - \"Now, five years after the start of the crisis, the worst has passed. Most of the countries in your neighborhood have returned to growth, along with Romania.\"\n  - \"This year, we expect only two countries—Croatia and Slovenia—to remain in recession, compared to eight last year.\"\n- Key lessons and policy imperatives:\n  - Integration remains the right path despite risks; risks \"can be managed.\"\n  - Three key actions to harness integration for lasting growth:\n    - Ensure macroeconomic stability: many countries took steps to rein in public deficits.\n      - Example: \"last year Latvia had a budget surplus compared to a deficit of nearly 8 percent of GDP in 2009.\"\n      - \"about half the countries in the region still have deficits over 3 percent of GDP and public debt has been rising.\"\n    - Share the burden of adjustment fairly and support growth:\n      - Use easy monetary policy as cushion while anchoring inflation expectations.\n      - Strengthen social safety nets to protect the most vulnerable during budget cuts.\n    - Lift potential growth through structural reforms:\n      - \"Potential growth across the region has slowed substantially since the crisis, from over 5 percent in 2007 to less than 2½ percent in 2012.\"\n      - Address country-specific roadblocks: dysfunctional labor markets, poor infrastructure, unfinished transitions."
    },
    {
      "heading": "The Path Forward for Romania",
      "content": "- Romania’s strategic position and potential:\n  - EU market and FDI links:\n    - \"the European Union is an enormous market—the destination for about 70 percent of Romania’s exports and the source of more than three-quarters of foreign direct investment.\"\n  - Income and labor indicators:\n    - \"income per capita around one quarter of the EU average\"\n    - \"Labor market participation is among the lowest in the EU at 64 percent, and lower still for women.\"\n  - Natural advantages: \"potentially abundant supply of natural energy,\" \"strategic location on the Black Sea,\" and \"an energetic and largely untapped workforce.\"\n- Stabilization achievements:\n  - Romania \"reduced its fiscal deficit by more than 6 percent of GDP\" in the space of three years.\n  - Romania \"has exited the EU’s Excessive Deficit Procedure this year.\"\n  - The Vienna Initiative exemplified successful public-private coordination to stabilize the banking system.\n  - IMF provided financial and technical support and seeks continued partnership.\n- Structural priorities to translate stabilization into sustained and inclusive growth:\n  - Continue structural transformation to \"thrive, not just to survive.\"\n  - Maintain and expand reforms that boost competitiveness and employment while strengthening social protections.\n  - Specific reform areas:\n    - Liberalizing energy prices gradually while better targeting social assistance to protect the vulnerable (Romania cited as having \"the hallmarks of a model approach\").\n    - Improve the quality of energy and transportation infrastructure by enhancing the viability of state-owned entities and creating an environment that attracts private-sector investment to raise efficiency.\n    - Improve Romania’s ability to effectively use EU funds for efficient public investment.\n  - Emphasis on persistence: \"policy actions take time to create change and generate growth.\""
    },
    {
      "heading": "A Final Thought",
      "content": "- Romania’s future is a shared future within the European family and the global community.\n- Cultural note and motto: \"Unde-s doi, puterea creşte\" — translated as \"where there are two, the strength rises\" or \"we are stronger together.\"\n- Closing sentiment: \"Romania is both undeniably unique, yet also profoundly European. As part of the European family, as part of the global community, Romania can go from strength to strength.\"\n\nSource: Christine Lagarde, \"Eastern Europe and Romania—The Path to Prosperity,\" Bucharest, July 16, 2013.\n\n---\n\n\n References\n\n- Romania and the IMF\n- Speeches\n- Christine Lagarde\n- PRESS CENTER\n- Video of the Speech\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/sp071613"
    }
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    "Authors: Christine Lagarde Managing Director",
    "Published: July 16, 2013",
    "Overall global growth:",
    "Risks and watch points:",
    "Focus areas going forward: people, policies, and partnerships.",
    "Past transformation and growth:",
    "Crisis-era vulnerabilities:",
    "Recovery status:",
    "Key lessons and policy imperatives:",
    "Romania’s strategic position and potential:",
    "Stabilization achievements:",
    "Structural priorities to translate stabilization into sustained and inclusive growth:",
    "Romania’s future is a shared future within the European family and the global community.",
    "Cultural note and motto: \"Unde-s doi, puterea creşte\" — translated as \"where there are two, the strength rises\" or \"we are stronger together.\"",
    "Closing sentiment: \"Romania is both undeniably unique, yet also profoundly European. As part of the European family, as part of the global community, Romania can go from strength to strength.\"",
    "[Romania and the IMF](http://www.imf.org/external/country/ROU/index.htm)",
    "[Speeches](https://www.imf.org/en/news/searchnews)",
    "[Christine Lagarde](https://www.imf.org/external/np/omd/bios/cl.htm)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[Video of the Speech](https://www.imf.org/external/mmedia/view.aspx?vid=2548690703001)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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