1 CHALLENGES FOR THE GLOBAL ECONOMY AND THE REPLY OF THE ROMANIAN ECONOMY CMTEA Iasi, September Varujan Vosganian Minister of Economy and Finance

2 ECONOMIC GLOBAL CHALLENGES Harsh climatic conditions (floods, drought); Increase in the competition on the internal market after the entrance into the Union; Economic recession in the USA and the developed European countries; The inflationary shock, that was determined by the food and energy prices going up; –The first shock that has not as a primary cause only the increase in the oil price; The financial and immovable crisis (USA, Spain, UK); Changes in the weather and the restrictive politics offered as a reply.

3 GDP development on quarters

4 Monthly increase in prices

5 Industrial Production -percentage change as compared to previous month- (series seasonaly adjusted)

6 THE REPLY OF THE ROMANIAN ECONOMY - AN EXCELLENT REPLY- Even if there have been floods and drought, the average economic growth was of 6.0% for in the non-agricultural activities, the average growth was of 7.8% In the first semester of this year, the increase in the GDP was of 8.8% - an absolute record after 1990 The highest economic, investment and construction growth registered among the EU countries According to the National Commission for Economic Forecasting, Romanian economy has 9% growth chances for Romania ranks first in the Europe at the economic growth!

7 The biggest investment growths after 1990!  In , the foreign investment in Romania surpassed 35 bln. Euro, that is more than doubled as compared to  Adequately, the total investment in the economy doubled the average annual growth, from less than 10% during to about 20% during

8 GDP growth in the 2nd quarter 2008

9  2007 can be declared as the year with the new record for the private investment  The investment from the private sector registered an increase of 44.5% as compared to 2006, the most substantive gain in the last years (the 2005 had registered a 24.9% record) Investment dynamics

10 ROMANIA – AN ATRACTIVE MARKET FOR THE FOREIGN CAPITAL In the 1 st semester there registered the biggest inflows of foreign investment, respectively, 4.8 billions euro, almost the same as with the inflows in 2004 and 2005 (5.1 billions euro and, respectively, 5.2 billions euro), which is a vivid proof of the trust of the foreign investors. The share of the foreign investment in GDP reached 9% as compared to 7,5% in the 1 st semester With a value of the foreign investment that reached 26.2 billions euro during 2005 – 1 st semester 2008, Romania confirms its leader position among the new EU member states. The coverage degree of the current account deficit through foreign investment reached 60.7% (47.7% in the first semester of 2007), which is another argument for the sustainability of the economic growth.

11 Foreign Direct Investment

12 Monthly development of the consumption prices July July 2008

13 Budgetary expenditure for investment

14 Budgetary expenditure for investment in 2007