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Key Economic Data 
  2003 2002 2001 Ranking(2003)
Millions of US $ 60,358 44,428 38,700 52
GNI per capita
 US $ 2,310 1,850 1,720 100
Ranking is given out of 208 nations - (data from the World Bank)

Books on Romania


Update No: 156 - (26/05/10)

The Greeks are not the only people to explode in the Balkans
The Greeks are in turmoil. So are the Romanians, blowing hot and cold. Blowing at first whistles and chanting in protest at a plan to cut public sector wages aimed at shoring up Romania's ailing economy. A crowd of 40,000 marched through Bucharest on May 20.

The civil servants and pensioners blocked traffic in the city centre, as they protested outside government offices. The Economy Minister Marcel Hoara was booed and pelted with water and stones.

Union leader Iacob Baciu said a general strike will be called on 31 May if the wage and pension cuts go ahead. This looks overwhelmingly likely. We will not leave until the government quits," said Bogdan Hossu, leader of the Cartel Alfa trade union.

The government has proposed wage cuts of 25% and pension cuts of 15% in order to reduce the country's budget deficit.

The economy in crisis
The economy shrunk more than 7% last year and it needed an IMF bail-out in order to meet its wage bill.

It says it needs to implement new austerity measures to qualify for the next instalment of the 20bn-euro ($25bn) IMF loan.

The perception of the financial experts regarding the evolution of Romania’s economy over the next six months got worse in May, although the perception for Central and Eastern Europe got better, according to a survey of ZEW and Erste bank group.

Thus, the ZEW indicator of expectations of financial experts regarding the evolution of the economy over the next six months dropped in May in the case of Romania by 8.2 points, against April at 27.2 points. Moreover, the indicator for the evaluation of the present business conditions diminished by 7.3 points, at -47.8 points, the most reduced level in the region.

At the same time, 46% of the participants to the survey estimate that the interests will drop on short term. The analysts appreciate that the leu will depreciate against the euro, although the single European currency is losing its power against the other currencies. As regards salaries, the experts estimate that they will go up in Romania this year, but slower than in the other ECE states. At the same time, the distribution of income in Romania will be characterized by the highest degree of inequality in the region.

In Central and Eastern Europe the indicator of trust in the economy increased by 7.2 points, at 35.2 points. For the euro zone, the indicator of trust went up by 2.4 points, at 32 points in May.

The region seems to be affected by worries connected to the crisis of debts in certain euro zone countries.

Whiff of revolution in the air
Protesters began gathering at the capital from early morning on May 19. Police put the number present at around 30,000, while the unions said it was 50,000. Many of them arrived from other parts of the country by bus and police blocked a number of streets in the city to maintain order.

The gathering was one of the biggest on the streets of Bucharest since the Romanian Revolution. Marian Gruia, head of the policemen's union, called on Romanians to unite, "as we did in 1989, when we overthrew the dictatorship" of communist leader Nicolae Ceausescu.

Demonstrators carried banners criticising the centrist government of Prime Minister Emil Boc and President Traian Basescu. Mr Boc was re-appointed in December after being forced out when his coalition collapsed in October. Mr Basescu has said cuts to Romania's huge public sector - which accounts for a third of all jobs - are preferable to tax rises.

But analysts and investors apparently fear the government may lose its nerve and cave in to the protesters. An auction of government debt earlier in May failed to attract enough interest.

Bourse badly hit
The global flight for safety can strike the vulnerable with no warning as Romania seems to have learnt to its cost today. At 1225 BST stocks in Bucharest are down over 9 per cent, compared to 4.6 per cent in Russia, 4.3 per cent in Spain, and 3.4 per cent in Greece - the next three worst-performing bourses.

It was not that the Romanian markets suffered any exceptional shock on May 25: there was no new news in Bucharest. But the combination of global turmoil and intense concern about the Romanian government’s ability to manage its troubled economy was enough to frighten investors. This bodes ill for other vulnerable economies in central and Eastern Europe - and beyond.

There are some special circumstances - with a capitalisation of only $14bn, the Bucharest market is small and volatile. It has also enjoyed a strong run this year and is hardly cheap, trading, even after the drop, at around 15 times 2010 earnings. Bucharest was, perhaps, riding for a fall.