The Situation Of The Romanian Economy

Due to its high level of exposure to housing speculation and dependency on foreign bank
capital, Romania was heavily affected by the economic crisis. A few factors that affected the economy
of Romania are: inflation, unemployment and tax burdens.
Inflation in Romania refers to the general increase in prices of goods and services over time. It
is typically measured by the consumer price index (CPI), which tracks the average change in prices of
a basket of goods and services consumed by households. In Romania, the inflation rate has been
relatively volatile in recent years, fluctuating between negative and positive levels. In 2020, the
average inflation rate was 0.5%, but it has been as high as 6.4% in 2018. The central bank of Romania,
the National Bank of Romania, uses monetary policy to try to maintain price stability and control
inflation. It sets an inflation target and adjusts interest rates accordingly to achieve this goal.
Unemployment in Romania refers to the percentage of the labor force that is actively looking
for work but is unable to find it. The unemployment rate in Romania has fluctuated over time, but has
generally been on a downward trend in recent years. In 2020, the unemployment rate in Romania was
5.5%, which is lower than the average for the European Union. However, the COVID-19 pandemic
has had an impact on the labor market, and the unemployment rate has increased slightly as a result.
The government has implemented various measures to support employment and encourage job
creation, including training programs, tax incentives for businesses, and other measures.
The tax burden in Romania refers to the total amount of taxes paid by individuals and
businesses to the government. It is relatively high compared to other countries in the European Union,
with the total tax burden (including both direct and indirect taxes) at approximately 41.2% of GDP in
2020. This includes progressive income tax rates ranging from 10% to 40% for individuals, a corporate
income tax rate of 16%, and a value-added tax (VAT) of 19% on most goods and services. The
government has implemented various tax reforms in recent years aimed at reducing the overall tax
burden and improving the business environment.
As a conclusion, the economy of Romania still faces challenges, including a relatively high
level of poverty, income inequality, and a high level of external debt.